Section 43A-Confusion

Hiii friends

Somebody please explain the following provision of sec 43A, it(Sec 43A(1B) says that if the, the Private Company holds more than 25% of the paid up capital in the Public Company, then it shall be deemed to be the Public Company and sec 43A(1A) says that if the average turnover of the private company exceeds the prescribesd limits, then it shall be deemed to be the public company.

There may be many companies which might be holding more than 25% of the paid up share capital in the public company and many private companies that might be having the averag turnover more than the prescribed limit(Rs. 10 crores), but they doesn't become PUBLIC COMPANY.

Please throw some light on the same.

[(1A) Without prejudice to the provisions of sub-section (1), where the average annual turnover of a private company, whether in existence at the commencement of the Companies (Amendment) Act, 1974, or incorporated thereafter, is not, during the relevant period, ⁴[less than such amount as may be prescribed], the private company shall, irrespective of its paid-up share capital, become, on and from the expiry of a period of three months from the last day of the relevant period during which the private company had the said average annual turnover, a public company by virtue of this sub-section:

Provided that even after the private company has so become a public company, its articles of association may include provisions relating to the matters specified in clause (iii) of sub-section (1) of section 3 and the number of its members may be, or may at any time be reduced, below seven.

(1B) Where not less than twenty-five per cent of the paid-up share capital of a public company, having share capital, is held by a private company, the private company shall,-

 

(a) on and from the date on which the aforesaid percentage is first held by it after the commencement of the Companies (Amendment) Act, 1974, or

(b) where the aforesaid percentage has been first so held before the commencement of the Companies (Amendment) Act, 1974, on and from the expiry of the period of three months from the date of such commencement, unless within that period the aforesaid percentage is reduced below twenty-five per cent of the paid-up share capital of the public company,

become, by virtue of this sub-section, a public company and thereupon all other provision of this section shall apply thereto.

Regards

Priya Sharma