Investment Company under Companies Act, 2013

Link of my previous video on Section 8 Company :
   • Section 8 Company # Companies Act 201...  

As per explanation to section 186, “investment company” means a company whose principal business is
the acquisition of shares, debentures or other securities.
An investment company is a company, the principal business of which consists in acquiring, holding and
dealing in shares and securities. The word ‘investment’, no doubt, suggests only the acquisition and holding
of shares and securities and thereby earning income by way of interest or dividend etc. But investment
companies in actual practice earn their income not only through the acquisition and holding but also by
dealing in shares and securities i.e. to buy with a view to sell later on at higher prices and to sell with a view
to buy later on at lower prices.
If a company is engaged in any other business to an appreciable extent, it will not be treated as an
investment company. The following two sets of legal opinions are quoted below as to the meaning of an
investment company:
(i) According to one set of legal opinion, an "investment company" means company which acquires
and holds shares and securities with an intent to earn income only from them by holding them. On
the other hand, another school of legal opinion holds that “an Investment Company means a
company, which acquires shares and securities for earning income by holding them as well as by
dealing in such shares and other securities”.
(ii) According to Section 2(10A) of the Insurance Act, 1938, an investment company means a company
whose principal business is the acquisition of shares, stocks, debentures or other securities.