Significant influence by share ownership, statute or agreement - Urgent

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This discussion clarifies the concept of significant influence, particularly in relation to company ownership, statutes, and agreements. It provides examples such as indirect shareholding (e.g., Company A owning 20% of Company B, which owns 20% of Company C, leading to a 4% indirect ownership) and how agreements like loan covenants allowing a bank to appoint a director, or statutory requirements for government directors, can establish significant influence.

Tara Khandelwal

Tara Khandelwal (Querist)

04 May 2023 Dear Sir/Mam,

Can anyone give example for significant influence by statute or agreement.
Does Board of Directors appointed through resolution means significant influence by agreement

Please resolve the same as soon as possible

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

05 May 2023 Share ownership.
Company A owns a 20% voting common stock interest in Company B. Company B owns a 20% voting common stock interest in Company C. Therefore, Company A indirectly owns 4% of Company C. No contrary evidence exists to overcome the presumption that Company A has significant influence over Company B and that Company B has significant influence over Company C.
Agreement.
Bankers by loan agreement appoint a director in the board.
Statute.
Statutory requirement of government directors in case of company serving the public cause.

Tara Khandelwal

Tara Khandelwal (Querist)

11 May 2023 Thank you sir for the explanation of statute and agreement !!

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