Company X ,a public limited co. is holding 20% share capital in addition to Shares application money of Co. y ltd, a Pvt Ltd co. as on 31st March 2009. Many directors of these two companies are common. Can Co. Y will be treated as subsidiary co. of Co. X.
The above Co. X entered into a contract with Co.Y for rendering of services on 11th Dec2008. However Co X already rendered services to Co Y (i.e from Aug. 2008) on the basis of Letter of Award . As Co. X did not obtain the prior approval from CG , before entering into a contract they went for Compounding . The ROC is unaware about the transactions done before the date of contract, is it necessary for auditor to mention above fact in his audit report.
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
CA Final
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