187. Investments of company to be held in its own name
(1) All investments made or held by a company in any property, security or other
asset shall be made and held by it in its own 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, in order to facilitate the transfer thereof:
Provided that if within a period of 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 investments have been made by a company are not held by it in its own name, the
company shall maintain a register which shall contain such particulars as may be prescribed
and such register 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.
(4) If a company contravenes the provisions of this section, the company shall be
punishable with fine which shall not be less than twenty-five thousand rupees but which
may extend to twenty-five lakh rupees and every officer of the company who is in default
shall be punishable with imprisonment for a term which may extend to six months or with fine
which shall not be less than twenty-five thousand rupees but which may extend to one lakh
rupees, or with both.