Query on section 4(7) of companies act

Others 2426 views 3 replies

VIKRAM KAPOOR

professional

40 Points Posted on 25 April 2009

Dear All,

I have a query on the applicability of section 4(7) of companies act under the following circumstances:

A private limited company in india is aquired by a company incporporated in mauritius (not a listed company). The mauritius company holds more than 85% of equity share capital in the indian company.

Further the mauritius company is the wholly owned subsidiary company of a company listed in US.

As in this case the indian private limited company is a subsidiary of a mauritius company which is not a listed company , will the indian company attract the applicability of section 4(7) of the Indian Companies Act.

Views of the learned professionals is requested.

Regards

Vikram

Replies (3)

NAVEEN NARANG

COMPANY SECRETARY

71 Points Posted on 26 April 2009

In case the balance 15% share capital is held by any company incorporated outside India, the Indian company will be treated as Pvt. Ltd company. If not, the indian company will be treated as a subsidiary of a public company and hence the provisions applicable on a subsidiray of public company will be applicable on it.

VIKRAM KAPOOR

professional

40 Points Posted on 27 April 2009

Thanks Naveen.

Kinjal Shah

Owner

71 Points Posted on 28 April 2009

Hi! The provisions of Section 4(7) of the Companies Act, 1956, only applies when the Maritius base company fall under the definiation of the Public Limited Company as set out under Section 3 of the Companies Act, 1956 not otherwise. I would suggest check the Articles of Association of the Maritius Base company to know the status of Indian Private Limited Company. Since the Maritus base company is wholly owned subsidiary of US base company therefore your the questioned private limited company will also become the subsidiary of the public limited company pursuant to Section 4(1)(c) of the Companies Act, 1956