Board Resolution: Investment in Securities (Section 186)
Approve an investment in the shares or securities of another company at a board meeting, within the limits of Section 186.
What it is
Section 186 of the Companies Act, 2013 regulates loans, guarantees, security and acquisitions of securities of other bodies corporate. Every investment needs a resolution passed at a meeting of the board with the consent of all directors present. Investments beyond 60% of paid-up capital, free reserves and securities premium, or 100% of free reserves and securities premium, whichever is more, need a special resolution of members. This resolution records the investee, the securities, the amount and price, and the limit check.
When it is used
- Investing surplus funds in shares of another company.
- Acquiring a stake in a subsidiary or joint venture.
- Subscribing to debentures or other securities.
What the template covers
- Company name, CIN and meeting details
- Investee name, CIN and address
- Type and number of securities
- Investment amount and price per security
- Check against Section 186 limits
- Authorisation and entry in the register
Details you will need
The generator asks for the following. Fields marked with an asterisk in the form are required; the rest can be left blank and filled in later in Word.
Company
Company Name; CIN; Registered Office
Meeting
Board Meeting Date; Place
Investee
Investee Company Name; Investee CIN; Investee Address
Investment
Type of Securities; Investment Amount (₹); Number of Securities; Price per Security (₹)
Sec 186 Compliance
Investment within Sec 186 limits?
Authentication
Chairman Name; Chairman DIN
Stamp duty, registration and filing
Investments are entered in the register in Form MBP-2. A company cannot make investments through more than two layers of investment companies, subject to exceptions. Where a term loan from a public financial institution is outstanding and in default, its prior approval may be needed. Investment in a foreign company is governed by the FEMA overseas investment rules.
Generate the BR — Investment in Securities
Fill in the form and download the draft as a Word file. It is a general template, not legal or professional advice; have it reviewed for your facts before you sign or rely on it.
Need this checked against your facts, or the registration or filing that follows (e.g. the related MCA e-form)? Contact SKAG and Associates
Related documents
Frequently asked questions
Does every investment need board approval?
Yes. Section 186 requires a board resolution passed at a meeting with the consent of all directors present.
When is a special resolution needed?
When the investment, with existing ones, exceeds the higher of 60% of paid-up capital, free reserves and securities premium or 100% of free reserves and securities premium.
Do these limits apply to investment in a wholly owned subsidiary?
Investments in a wholly owned subsidiary are exempt from the special resolution requirement, but board approval is still needed.
This page gives general information for reference only. Laws, stamp duty rates and filing requirements change and differ between States, so confirm the current position for your case. Related: all document templates · free tax calculators · compliance calendar and guides.