Eclexys (Consultant) 26 October 2008

Pvt. Ltd. Co.: Majority Shareholder's liabilities

If a person holds nearly 85% shares of a Pvt. Ltd. Co. but has chosen not to be a director, and has kept himself away from day-to-day (even year-to-year) affairs of the company, and if none of the directors are shareholders of the company, does this person become liable if the company fails in legal compliance or defaults in paying Government dues or incurs debts?

Thanks in advance for guidance.

Regards
Eclexys

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4 Replies

ca.bhupendrashah (FCADISA) 27 October 2008

section 179 of i tax act will solve your problem

Eclexys (Consultant) 27 October 2008

Thank you sir, but section 179 refers to directors and to companies under liquidation.

This company is not under liquidation. And this person is not a director, but a majority shareholder who chooses to stay away from company operations.

What provisions (under IT act and also under Companies Act) would he attract?

Thanks and regards

Eclexys

Manish Singh (Advocate) 27 October 2008

no for leagl obligations, the person or director who were in charge of the said liability would be prosecuted for the same. you are not going to be blamed for that.

but in case of winding up, you shall be liable to the amount of shares held by you.