Meaning of "Principal Business"

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Avika, ACS (Querist)

11 July 2009 what is the meaning of the term "Principal Business" of a Company under the Companies Act, 1956.

Kindly provide a reference where I can find the definition.

Ankur Garg

Ankur Garg (Expert)

11 July 2009 Hi Avika,

First check Main object of the your Company.

As per my opinion Objects contained in main objects of the company and adopted by the company at the time of starting business forms principal business of the Company.

Best Regards

Avika, ACS

Avika, ACS (Querist)

11 July 2009 Dear Sir,

If the Company has three segments contributing to its total revenue, which one would be considered as its principal business?

Would the decision be made based upon the investment made in the activity or turnover from the activity or revenue from the activity??

vinod kumar lalwani

vinod kumar lalwani (Expert)

11 July 2009 Hi Avika,

if u treat principal business on the basis of turnover or revenue than everytime there will be new principal business on the basis of contributin of particular segment in revenue or turnover so u have to take a stable definition.

it should be determined on the basis of object clause in MOA. u can also take income tax return to see whether co. showing under head of business income or under any head.

Ankur Garg

Ankur Garg (Expert)

11 July 2009 Agree with Vinod.

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