Interpretation of section 4(7) of the Companies Act 1956

[Vivek Hegde]

Dear All

Kindly express you views on the above. And also answer my query below:

An Indian private company whose 65% shares are held be a UK based company which has the name .................................LIMITED (without the word 'private').

Will Indian company become subsidiary of a Public Company?

How to determine whether that UK based company is a PUBLIC CO?

Warm Regards

CS Vivek Hegde,B.com, ACS, CWA
Company Secretary in Practice
No. 405, 4th Block, 7th Cross
Koramangala, Bangalore-560034
Mob: 09019756940/09900898223

[Natesh Kalidevapur]

Dear Vivek,

 

check the following;

 

1) No. of members. ...........7

 

2) No.of Directors.........3

 

3) Paid up capital..............5 Lakhs

 

4) read the bye laws check for restrictive clauses like 3(1)(iii) abcd..........yes, then not a public comp

 

check whether securities are freely transferrable or not...........not, then not a public comp

 

take shelter under any one of the above

 

 

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with regards

Natesh K
Bsc., LL.B., A.C.S.
Company Secretary

No.287,26th Cross, 9th Main,B.S.K 2nd  Stage, Bangalore-560 070
Phone No. 080-26712017
Mobile No.9740955771

[Vivek Hegde]

thanks Natesh

that UK based holding company has only one shareholder....so that is not a public co right?   though its name ends with LIMITED? 

how to convince ROC...?

Vivek

[Natesh Kalidevapur]

yes, you r right

carry constitution and bye laws highlight the relevant provisions mentioned earlier.

[Vivek Hegde]

No. His argument is since that UK company does not have the word "private limited" in its name it is a PUBLIC LIMITED..:) 

Vivek

[Natesh Kalidevapur]

No his argument is not correct, is it possible in india to float a  pub.company with single shareholder ask him to clarify? is it DROC? very difficult to satisfy his ego. first of all why he what this now? no way linked to incorp.

[Vivek Aggarwal]

Dear Chakri

 

Sub section 7 of section 4 very clearly says that the pvt. company would be considered subsidiary of a Public Company if that holding company, if incorporated in India, would be a Public Company.

 

In your case, your U.K. holding company is not satisfying that criterion of being a Public Company as per Indian Law if incorporated in India. So as per law, your Indian Pvt. Co. is not to be considered as subsidiary of a Public Company. Therefore I agree with Mr. Nathesh that ROC is making lame excuses.

Please check one more requirement as per Section 4 (7), if the remaining 35% shares are also held by any foreign company, that thing will go in your favour.

 

Regards

Vivek Aggarwal

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From: Natesh Kalidevapur <nate...@gmail.com>
To: csmy...@googlegroups.com
Sent: Fri, 2 July, 2010 2:37:48 PM
Subject: Re: [CSMysore] Interpretation of section 4(7) of the Companies Act 1956

[renukameera91]

Dears,

 

In UK, all private limited companies will end up with the word Limited and Public Limited  Companies will end up with the word PLC.

 

With Regards,

C.Renuka,

CEO,

The KTM Jewellery Ltd.,

Coimbatore

 

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[renukameera91]

[renukameera91]

---------- Forwarded message ----------
From: renukameera91 <renuka...@gmail.com>
Date: Sat, Jul 3, 2010 at 8:14 PM
Subject: Re: [CSMysore] Interpretation of section 4(7) of the Companies Act 1956

[Vivek Hegde]

Dear Natesh /Madam

Thank you for the clarification.

Vivek

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[A. Narayanan]

Dear Vivek/Natesh,
One more point that I want to highlight here even though it is not
material to the present case. As per the last part of Sub sec 7, if
the ENTIRE SHARE CAPITAL in the Indian pvt company is held by a
foreign incorporated public company (or jointly with another foreign
incorporated body corporate) the Indian pvt company will not be deemed
to be the subsidiary of the foreign incorporated public company.

Regards
A.NARAYANAN
9382881354

[Vivek Hegde]

Dear Mr. Narayan

Your point is well noted.

Thanks

Vivek

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