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CMA Final · Corporate and Economic Laws · Investment and Loans

Which of the following is the correct position regarding the application of the layer restriction in Section 186(1) to the companies listed in Section 186(11)?

The layer restriction still applies. Section 186(11) says nothing in the section applies to the listed categories except sub-section (1), so banking, insurance and housing finance companies and others listed remain subject to the two-layer limit even though other provisions are relaxed.

  1. ABanking companies are exempt from all of Section 186, including the layer restriction
  2. BSection 186(11) exempts the specified companies from the section except sub-section (1), so the layer restriction still appliesCorrect
  3. CInvestment companies alone are exempt from sub-section (1) but not from other sub-sections
  4. DHousing finance companies are exempt only from sub-section (1)

Explanation

Section 186(11) begins 'Nothing contained in this section, except sub-section (1), shall apply' to the listed loans and investments. Hence the layer restriction in sub-section (1) continues to apply even to banking, insurance and similar companies. The other options reverse or misstate this.

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