Kamakshi Steels Ltd wants to acquire the equity shares of Meenakshi Steels Ltd for a value of ₹4 crore. The following are the balances of Kamakshi Steels Ltd as on date : Authorised share capital ₹50 crore Paid up share

The problem given is based on the provisions of the section 186 of the Companies Act, 2013 which deals with inter-corporate loans and investments by the company. As per Section 186(2) of the Companies Act, 2013, No company shall directly or indirectly — (a) give any loan to any person or other body corporate; (b) give any guarantee or provide security in connection with a loan to any other body corporate or person; and (c) acquire by way of subscription, purchase or otherwise, the securities of any other body corporate, exceeding 60% of its paid-up share capital, free reserves and securities premium account or 100% of its free reserves and securities premium account, whichever is more. Further, where the aggregate of the loans 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 Companies Act, 2013, no investment or loan shall be made or guarantee shall be given or security shall be provided unless previously authorised by a special resolution passed in a general meeting. In the given scenario: Paid-Up Share Capital= ₹5 Crore Free Reserves= ₹1 Crore So, 60% of (₹5 Crore + ₹1 Crore) = ₹3.6 Crore or 100% of ₹1 Crore= ₹1Crore So, Higher amount is ₹3.6 Crore Since the amount of proposed investment along with outstanding amount (₹4 crore+ ₹3 crore=₹7 crore) is more than the above stipulated limit, following procedure is to be followed by Kamakshi Steel Ltd. before investment: Prior approval of all the directors present at the Board meeting is required. Prior approval of concerned public financial institutions, where term loan is subsisting is required. Passing of special resolution through postal ballot. The company shall disclose to the members in the financial statement the full particulars of such investment and the purpose for which is proposed to be utilised by the recipient of the loan or guarantee or security. Enter the prescribed particulars in the Register of Loans and Investments maintained by the company File a copy of the special resolution in Form MGT-14 with Registrar of Companies within 30 days of passing of the resolution.