Legal Question in Business Law in India

Dear Sir / Madam,

Earlier in Companies Act, 1956, there was a specific section 153 stating that the trust cannot be a member of the company and they had to hold shares or investment in other companies in the name of the trust​ee (as a nominee of trust)​.

There is no corresponding provision in Companies Act, 2013. Now my questions are:

1. Can a trust (whether registered or unregistered) hold shares in a private / public limited company and enter the name of trust in the Register of Members of the Investee Company?

2. If a trust is a SEBI registered venture capital fund, then the investment made by such fund in a ​private / public limited ​company then whose name should be enter in Register of Members of the Investee Company?

Regards,

Deep Vaghela


Asked on 1/17/17, 3:01 am

1 Answer from Attorneys
Fca Prashant Chavan Expert Edge LLP

17.01.2017

Dear Deep,

1. Section 88 of the Companies Act, 2013 and related provisions therein do not specifically debar a Trust from being admitted as a member of the Company. In my opinion, the name of the trust can be entered in the Register of Members of the Investee Company.

2. Section 187 of the Companies Act, 2013 clearly specifies that investments made or held by a Company are to be made in its own name. The name of the registered trust will be entered in the Register of Members of the Investee Company.

Regards,

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Answered on 1/17/17, 4:06 am


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