You are a company secretary of Bunny Ltd. a listed company and Bunny Ltd. has proposed in November, 2023 to make an investment of ₹80 lakhs in the equity shares of Hunny Investment (Pvt.) Ltd. the face value of which is

Investment by a Company. According to Section 186(2) of the Act , no Company shall directly or indirectly - give any loan to any person or other body corporate; give any guarantee or provide security in connection with a loan to any other body corporate or person; and acquire, by way of subscription, purchase or otherwise, the securities of any other body corporate, exceeding 60% of its paid-up share capital (equity and preference), free reserves and securities premium account or 100% of its free reserves and securities premium account, which ever is more. As per Section 186 (3) of the Act , where the aggregate of the loan and investment so far made, the amount for which guarantee or security so far provided to or in all other bodies corporate along with the investment, loan guarantee or security proposed to be made or given by the Board, exceed the limits specified under Section 186(2) of the Act, no investment or loan shall be made or guarantee shall be given or security shall be provided unless previously authorized by a special resolution passed in a general meeting. As per Section 186 (5) of the Act , any investment shall be made or loan or guarantee or security given by the Company only after the resolution sanctioning it is passed at a meeting of the Board with the consent of all the directors present at the meeting and the prior approval of the Public financial Institution concerned where any term loan is subsisting shall also be obtained. Calculation According to the information given in the problem: 60% of paid-up share capital (equity and preference), Free reserves and securities premium account is ₹168 Lakh (i.e. 60% of [₹240+20+20] = ₹168 Lakh) or 100% percent of its free reserves and securities premium account is ₹20 lakh; Hence, investment up-to ₹168 lakh is allowed without seeking prior authority by special resolution passed in a general meeting. Bunny Ltd has already given guarantee to the tune of ₹100 Lakh to a Nationalized Bank in connection with the loan granted to Richa Ltd. The aggregate of the loans and investments so far made, the amount for which guarantee or security so far provided to or in all other bodies corporate, along with the investments, loans, guarantee or security proposed to be made is ₹180 Lakh (i.e. ₹100 Lakh existing guarantee + proposed investment of ₹80 Lakh) which is exceeding the limit of ₹168 Lakh. Therefore, the proposed investment shall be first approved by the Board with the consent of all the directors present at the meeting (i.e. unanimously) and then approved by the members by passing a Special resolution. Note: The MCA has clarified that loans and/or advances made by the companies to their employees, other than the Managing or Whole Time Director are not governed by Section 186 of the Act. Hence, it is not considered in the computation of limit.