section 3(1)(iv) of the Companies Act, 1956

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udit sharma (Querist)

01 November 2010 Whether a Private Company which has become a wholly owned subsidiary of a Public Limited Company required to alter the provisions of its Articles of Association so as to remove the basic characterstics of a Private Limited Company as provided under section 3(1)(iii) of the Companies Act, 1956?

Ajay Mishra

Ajay Mishra (Expert)

01 November 2010 Hi

I think there is no need to change the Articles of the Company.Because on subscribing all capital by public company Companies Act does not requires to change the articles of private company.

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udit sharma

udit sharma (Querist)

02 November 2010 Thank you very much Ajay sir for sharing your valuable knowledge.......

Suppose a Private Company "A Pvt. Ltd." has become a wholly owned subsidiary of a Public Limited Company w.e.f. 03.06.2010. Now, as per section 252(1) every Public Limited Company is required to have at least 3 Directors. After the Companies (Amendment)Act, 2000 every private Company which is a subsidiary of a Company which is not a private Company is also included in the definition of Public Limited Company as provided under section 3(1)(iv) of the Companies Act, 1956. As per my understanding, A Pvt. Ltd. will have to increase the number of Directors from 2 to 3 and also the number of members from 2 to 7 to meet the requirements of section 12(1) of the Companies Act, 1956. Am i Right?

Am i also required to increase the paid up captital of the Company from Rs. 1 Lacs to Rs. 5 Lacs?

I understand that A Pvt. Ltd. need not alter the basic characterstics of a Private Limited Company as provided under section 3(1)(iii) and consequently there is no need to increase the paid up capital of the Company since the minimum paid up capital prescribed for a Private Limited Company is Rs. 1 Lacs Only!!!!!!

Now,pursuant to becoming a wholly owned subsidiary of a Public Limited Co., if we increase the paid up capital, no. of Directors, No. of members and alter all the provisions of the Articles of Associaiton so as to remove the basic characterstics of a Private Limited Company, then A Pvt. Ltd. will become a Public Limited Company and can't be said to be covered by point iii. of Section3(1)(iv)?????

Please clarify sir ........

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