Deemed public company.

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Querist : Anonymous

Querist : Anonymous (Querist)

23 March 2012 Can anyone tell me the conditions under which the private company is deemed to become public company?

Ajay Mishra

Ajay Mishra (Expert)
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25 March 2012 Hi

Section 43 A of the Act deals with circumstances where a private company is deemed to be a public company. Specifically, a private company is by fiction treated as a public company while still retaining its articles and other identities.

The Companies (Amendment) Act, 2000 amended Section 3 of the 1956 Act to provide that a private corporate which is a subsidiary of public company will be deemed to be a public company.

At the cost of repetition, a deemed public company basically refers to a private company which is deemed to have become public under certain circumstances. However, such deemed public companies were permitted by Section 43A to retain the three restrictive conditions which are mandatorily required to be present in the Articles of a private company. These conditions, inter alia,restrict the free transferability of shares and prohibit inviting the public to subscribe to the shares of the company. The Company Law Board (CLB) in Hillcrest Realty Sdn.Bhd vs Hotel Queenroad (P) Ltd [(200 6) 72 CLA 245 CLB] held that the basic characteristics of a private company do not get altered by the mere fact that such a company is a subsidiary of a public company.

Further by virtue of Section 43A(11) of the Companies Act, 1956 the concept of deemed public limited Company is no more in force.

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