Whether a company even if having 50% holding in subsidiary can fully control its subsidiary thru AOA

Co Act 2013 165 views 6 replies

DEEPAK SAXENA

Head Commercial

27 Points Joined July 2022

Actually I have a technical query. A company GSPL (subsidiary of GSPC) says that they are not Govt company as GSPC ( Gujarat Govt 97% share company) has only 48% share in GSPL. GSPL AOA says that unless & until the share of GSPC goes below 26%, full control of company will be with GSPC/Govt. SO thru AOA Govt has full control. Your views please

Attached File : 3687280 20220717173932 aoa memorandum of association 031007.pdf downloaded: 9 times

Replies (6)

Guest

Shareholding is not the only requirement. As per Section 2(87)(i) of the Act if GSPC control the composition of the Board, they will be considered holding co of GSPL.

We should take care that AoA never override the provisions of the Act. In this case GSPC have put a check on themselves which is fine as the Act still supported them under 2(87)(i) as a holding co.

DEEPAK SAXENA

Head Commercial

27 Points Joined July 2022

Can GSPL write in their listing agreement with BSE that they shall appoint more than 50% independent directors and then can say in court they are not Govt company as per Article 12 & 226 of constitution ?

Chirag

Professional

1979 Points Joined December 2017

@ Deepak , Listing Agreement is Uniform. Governed by SEBI( LODR ) ,so ,NRC will propose suitable names for I/D here it's a State Govt Company ,So Ultimate Right may also be with the delegated authority or ministry in charge , For Article 12 & 226 it's a PSU ( Not by definition than by Act of Govt and Supporting dox like Mgt-7 ,Annual Report etc.)so may fall under Govt Company ,can be supported by SC Judgements..

DEEPAK SAXENA

Head Commercial

27 Points Joined July 2022

Thanks Chiragji- A case of mine is under consideration. In case you can provide me some case laws where a PSU less than 50% govt holding is considered STATE under Article 12 & 226 because of control thru AOA, it may me helpful- mail ID mayanka_shri @ yahoo.co.in

Chirag

Professional

1979 Points Joined December 2017

It's a bit tricky ,because by act GSPL seems to be PSU but purely on technical term , 37% shareholding of GSPC ,its not complying with 51% to be classified as State ,you may have to search on google about SC Judgements,but prima facie with AOA , Management Rights , and thorough reading of annual report and latest shareholding Pattern you can infer something ,if shares are issued by or held by to other state or central govt entity and combinely with GSPC holding its >51% then it will be State .