Third kind of allowed investment: lending money to existing investee companies
20B Third kind of allowed investment: lending money to existing investee companies
A PDF may make an investment by lending money to a company (in this Division also called the investee company) under an agreement with the investee company.
However, section 27 provides that, unless the Board otherwise approves, a PDF cannot make such an investment unless it first holds shares in the investee company. The total of all amounts paid on those shares must be at least 10% of the total of all amounts paid on the issued shares in the investee company.
Immediately after the agreement is entered into, the total of the outstanding amounts of loans that the PDF has made (other than the amounts of unregulated investments) must not exceed 20% of the shareholders’ funds of the PDF.
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