Question

Study the following case/situation and express your opinion.

ZEN Limited has some investible in profits. Please guide ZEN Limited with respect to the following:

(a)Can ZEN Limited invest in the share of itself?

(b)Can ZEN Limited invest in the Shares of TEN Limited?

(c) Justify your answers in (a) & (b) in one sentence only.

Answer 1

(a) ZEN Limited Company cannot invest its investible profit in its own shares.

(b) ZEN Limited Company can invest its investible profit in the shares of TEN Limited Company, only if its Memorandum of Association authorises it to do so.

(c) ZEN Limited Company is a legal person, is eligible to become a member of another company by purchasing shares of that company but cannot invest its investible profit in its own shares.