Investments Held in a Company's Own Name: s. 187

Section 187 of the Companies Act, 2013 requires that investments held in its own name by a company stay that way: all investments made or held by a company in any property, security or other asset shall be made and held by it in its own name. The section then carves out four situations where a different name is permitted, and requires a register for the most common of them.

Why must investments be held in the company's own name?

Because a company that routinely parks assets in other people's names has a ready-made way to obscure what it owns. Investments held in its own name is the default the Act sets so that the register of investments, the financial statements and any disclosure of holdings describe the same set of assets under the same name. The exceptions in sub-section (2) are drafted narrowly for that reason.

The one proviso to sub-section (1) is about subsidiaries. A company may hold shares in its subsidiary in the name of a nominee or nominees if it is necessary to do so to ensure that the number of members of the subsidiary is not reduced below the statutory limit. A wholly owned subsidiary needs a second member on paper, and this is the provision that permits the nominee holding that fills the gap.

What are the four exceptions in sub-section (2)?

Sub-section (2) says nothing in the section prevents a company from doing four things.

Clause (b) carries a six-month clock. If within six months of the transfer to, or first holding in the name of, the bank no transfer of the shares or securities takes place, the company must as soon as practicable have them re-transferred to it or again hold them in its own name.

Clause (c) is the one that reaches pledging. A company that gives its own investments as security for a borrowing is inside this exception, which is why a lender's name on a holding is not by itself a section 187 problem. The equivalent question on the promoter side is covered by promoter pledging, which is a separate disclosure regime.

Clause (d) is the one that does most of the work in practice. Every dematerialised holding sits in a depository's name with the company as beneficial owner, and without this clause ordinary market practice would breach the section.

What does the register under section 187(3) contain?

Sub-section (3) attaches to clause (d) specifically. Where, in pursuance of clause (d) of sub-section (2), shares or securities in which a company has invested are not held in its own name, the company shall maintain a register containing such particulars as may be prescribed. That register is open to inspection by any member or debenture-holder without any charge during business hours, subject to reasonable restrictions the company may impose by its articles or in general meeting.

The particulars are prescribed by rule 14 of the Companies (Meetings of Board and its Powers) Rules, 2014. As notified, rule 14(1) requires every company, from the date of its registration, to maintain a register in Form MBP3 and enter in it chronologically the particulars of investments in shares or other securities beneficially held by the company but not held in its own name, together with the reasons for not holding them in its own name and the relationship or contract under which the investment is held in another person's name. Rule 14(2) requires the company to record whether the investments are held in a third party's name for the time being or otherwise. Rule 14(3) puts the register at the registered office, to be preserved permanently in the custody of the company secretary, or where there is none, a director or other officer authorised by the Board. Rule 14(4) requires the entries to be authenticated by the company secretary or another person the Board authorises.

On the rules cited here. The rule text on this page comes from the copy of the Companies (Meetings of Board and its Powers) Rules, 2014 that thc.nic.in serves, and it is a notification text rather than a consolidation. Its body is the principal notification, G.S.R. 240(E) dated 31 March 2014, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), and made under sections 173, 175, 177, 178, 179, 184 to 189 and 191 read with section 469 of the Act. Bundled after it is a separate, later notification, G.S.R. 811(E) dated 3 November 2025, the Companies (Meetings of Board and its Powers) Amendment Rules, 2025, which substitutes sub-rule (2) of rule 11 and nothing else. The footer note on that 2025 notification records the principal rules as last amended by G.S.R. 409(E) dated 15 June 2021. So the rule text in the body is the 2014 text as originally notified, the amendments made between 2014 and June 2021 are not incorporated in it, and a rule quoted from it is not by itself evidence of the rule in force today. Check the amending notifications before relying on any rule text here for a filing. The section text on this page is the Companies Act, 2013 as consolidated on India Code, with each amendment footnote resolved on its own page.

Read that against the register the same rule set prescribes for loans and investments under section 186. Rule 12, headed "Register", requires a register in Form MBP 2 for loans, guarantees, securities and acquisitions, with entries made chronologically within seven days of the transaction. The two registers answer different questions: Form MBP 2 records what the company did, and Form MBP3 records why an asset is in somebody else's name. Section 186 loans and investments covers the first of those.

Where investments held in a company's own name show up in a filing

The section 187(3) register is an inspection right for members and debenture-holders, not a public filing, so an outside reader will not see Form MBP3 itself. What reaches the public record is the holding, and the name it is held under. For listed Indian companies that means the shareholding pattern filed with the exchanges, where a company's own holdings in another listed company appear under the holder's name, and how to read a shareholding pattern covers what those columns contain. Section 187 is the reason the name on that line is normally the investing company itself rather than a nominee.

The same logic runs through the interest-disclosure machinery. A director's interest in a body corporate is disclosed under section 184 and recorded in the register under section 189, and the register of contracts under section 189 covers that record.

Where this sits in the disclosure picture

• Section 186 loans and investments covers the limits and the separate register that apply to the investments themselves.
• The register of contracts under section 189 covers the neighbouring register kept under the same rule set.
• How to read a shareholding pattern covers the filing where a corporate holding becomes publicly visible.
• Promoter pledging covers the disclosure regime for securities given as security, which section 187(2)(c) permits at the company level.
• Disclosure of interest by a director covers the section 184 obligation that runs alongside this one.

Flock reports the filings themselves, each stamped with its date and linked back to the exchange or regulator that published it. What any of it means for you is your call to make.