Inter‑corporate investments ‑ In excess of limits ‑ When trading companies can be treated as investment companies - Companies Law - Letter : No. 8/2‑CL‑VI/61,

Letter : No. 8/2 ‑ CL ‑ VI/61, dated 23 ‑ 2 ‑ 1961. Subject:- Inter ‑ corporate investments ‑ In excess of limits ‑ When trading companies can be treated as investment companies The limit of 30 per cent prescribed by section 372 with regard to investment by companies applies to all investments by a company in the shares of any other company, irrespective of whether such shares are held for short or long periods or as long‑term investments or for sale or purchase. Investment companies, however, will not be subject to the 30 per cent limit in view of the provisions of sub‑section (13) of section 372. The question as to whether a particular share trading company which deploys its funds for short‑term transaction in buying and selling shares is an investment company or not, is one of fact which has to be determined in relation to the actual business transacted by it. The Department is inclined to the opinion that a company should be treated as an investment company if the whole or substantially the whole of its business relates to shares, securities, stock and debentures, etc. A share trading company may take advantage of these provisions of section 372 if it can be classed as an investment company. This view of the Government, however, need not be taken as an authoritative interpretation of law.