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No company shall directly or indirectly give any loan to any person or other body corporate; or give any guarantee or provide security in connection with a loan to any other body corporate or person; and acquire by way of subscription, purchase or otherwise the securities of any other body corporate, exceeding __________ of its paid-up share capital, free reserves and securities premium account or of its free reserves and securities premium account, whichever is more.

1. 70% and 80%
2. 60% and 100%
3. 40% and 90%
4. 100% and 60%

Correct answer: 60% and 100%

Solution

The question refers to the limits under the Companies Act for loans, guarantees, securities, and investments by a company. The correct threshold is 60% of paid-up share capital, free reserves and securities premium account, or 100% of free reserves and securities premium account, whichever is more.

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