Section 176 : Restriction on transaction between companies

(1) No company shall, directly or indirectly, transfer its paid-up capital and accumulated profits (up to sixty per cent of the free reserve or the accumulated profit (up to hundred per cent of the free reserve, whichever is higher) to any other company, or give security against any loan taken by any other company, or invest in the securities of any other company.

Provided that this provision shall not apply in respect of a company engaged in banking or financial transactions, an insurance company, a company whose primary object is the purchase, sale or investment of securities, a private company which has not taken loans from banks or financial institutions, a company for the purpose of providing physical infrastructure facilities and an investment made by the principal company in its wholly owned subsidiary, the security given to that company and the collateral given against the loan taken by that company and the investment made in the entitled shares issued under this Act.

(2) Subject to sub-section (1), the company shall keep the particulars as prescribed in respect of any security given to any other company, investment made in such company or security given in respect of any loan taken by such company.