Subsidiary of a foreign company

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

31 July 2015 Dear Experts

I am preparing a secretarial compliance checklist for a Private Company. However, when I checked the shareholding details of the company, there is a foreign company holding 98% of the shares of the Indian Private Company. In this case, the Indian Company will become a subsidiary of that foreign company.

My question is: Whether the company will be deemed to be a public company by virtue of section 4 sub-section 7 of the Companies Act, 1956 and provisions applicable to public company will apply. OR will it still be a private company.

Also note, that 10,000 shares are held by the subscribers to the memorandum and the balance by the foreign company.

Regards

Pratik Shah

Pratik Shah (Expert)
Follow

31 July 2015 It will continue to be a private company.
Provisions of Old Act is not applicable now in this regard.

Querist : Anonymous

Querist : Anonymous (Querist)

01 August 2015 Thank you for your reply Sir.

Hence as per the Companies Act, 2013, the provision of deemed public company has been dispensed with.

Therefore, if a private company incorporated in India, which is a subsidiary of a foreign company incorporated outside India, the Indian Company will continue to be a private company and all the provisions applicable to a private company shall apply to the Indian company.

I have also found a circular from MCA in this regard
https://www.mca.gov.in/Ministry/pdf/General_Circular_23_2014.pdf

Please correct me if I am wrong.

Pratik Shah

Pratik Shah (Expert)
Follow

01 August 2015 Yes..this circular has clarified your doubt. It will continue to be a private limited company.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now