THE COMPANIES ACT 2013: SECTION 187- INVESTMENTS OF A COMPANY TO BE HELD IN ITS OWN NAME
Updated: May 9
Section 187 of Indian Companies Act, 2013 "Investments of company, to be held in its name"
(1) All investments made or held by a company in any property, security, or another asset shall be made and held by it in its name:
Provided that the company may hold any shares in its subsidiary company in the name of any nominee or nominees of the company, if it is necessary to do so, to ensure that the number of members of the subsidiary company is not reduced below the statutory limit.
(2) Nothing in this section shall be deemed to prevent a company -
(a) from depositing with a bank, being the bankers of the company, any shares or securities for the collection of any dividend or interest payable thereon; or
(b) from depositing with, or transferring to, or holding in the name of, the State Bank of India or a scheduled bank, being the bankers of the company, shares, or securities, to facilitate the transfer thereof:
Provided that if within six months from the date on which the shares or securities are transferred by the company to, or are first held by the company in the name of, the State Bank of India or a scheduled bank as aforesaid, no transfer of such shares or securities takes place, the company shall, as soon as practicable after the expiry of that period, have the shares or securities re-transferred to it from the State Bank of India or the scheduled bank or, as the case may be, again hold the shares or securities in its own name; or
(c) from depositing with, or transferring to, any person any shares or securities by way of security for the repayment of any loan advanced to the company or the performance of any obligation undertaken by it;
(d) from holding investments in the name of a depository when such investments are in the form of securities held by the company as a beneficial owner.
(3) Where in pursuance of clause (d) of sub-section (2), any shares or securities in which a company has made investments are not held by it in its name, the company shall maintain a register which shall contain such particulars as may be prescribed. Such record shall be open to inspection by any member or debenture holder of the company without any charge during business hours subject to such reasonable restrictions as the company may by its articles or in general meeting impose.
Punishment for violation of Section 187 of the Indian Companies Act 2013 regarding holding of investment in the name of a company
(4) If a company contravenes the provisions of this section, the company shall be punishable with a fine which shall not be less than twenty-five thousand rupees but which may extend to twenty-five lakh rupees. In default, every officer of the company shall be punishable with imprisonment for a term that may extend to six months or with a fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees or with both.