comapny law
MOHIT
(Querist) 28 September 2010
This query is : Resolved
AB pvt ltd is a subsidiary comapny of a foreign company and foreign company holds 75% shares of AB pvt ltd.
My queries are as follows:
1)Will AB pvt ltd be deemed as public co. for applicability of provisions? Will it be treated as pvt co. or public co.?
2) Any change if foreign company holds 90% shares
s.subramanian
(Expert) 03 November 2010
It will be treated as Private company only.
Parthasarathi Loganathan
(Expert) 03 November 2010
With regard to the second point raised, no matter the percentage of stake that a foreign company holds, it is deemed to be a private company only and relevant provisions in the Companies Act will support this aspect.
R.Ramachandran
(Expert) 03 November 2010
Dear Mr. Mohit, the definition of private Company and public company is given in Section 3(1)(iii) and (iv) of the Companies Act, 1956.
However, what you really want to know (but query wrongly put) is whether in the fact situation given by you, the AB Company will be deemed to be a 'subsidiary of a public company'?
For this the answer lies in Section 4(7) of the Companies Act, 1956. YES, the AB company will be regarded as subsidiary of a public company, since the foreign company does not hold the entire share capital in the AB Co. So long as the foreign company does not hold 100% share in the AB Company, the AB Company will be deemed to be a subsidiary of a public company (whether the foreign company holds 75% or 90% share in the AB Company).
