[CSMysore] Query on Section 292A of Companies Act, 1956

[Nithya Jayakumar]

Dear Members

As per Section 292A of the Companies Act, 1956, a public company with a paid up capital of 5 crore or more shall constitute an Audit Committee.  Is it mandatory for a private company which is a subsidiary of a public company with paid up capital of 5 crore or more to constitute the audit committee?  Please clarify.

Thanks in advance

Regards
J. Nithya

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[Sriram Mohan]

Hi Nithya,

 

Since a Private Company is a subsidiary of a Public Company, it will be deemed to be a Public Company within the meaning of Companies Act, 1956 and hence is required to constitute an Audit Committee u/s 292A.

 

Regards

SM

[chakri hegde]

Dear All,

I have a contrary view on this issue.............

I think this section is not applicable to a Private Company which is subsidiary of a Public Co.

If this would have been the intention of the legislators, then the same would have been provided in the section 292A as "every public company and a private company which is a subsidiary of public company............. " 

A private limited company does not loose its character by being a subsidiary of a public co. Such private limited companies are construed as public limited companies only for certain express purposes and not for all.

So section 292A is not applicable for those private companies which are subsidiaries of pubic company.

Other members views are solicited......................

A private limited does not lose its character by being a subsidiary of a public company

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With Best Wishes
Chakri G Hegde
Nissin Foods India Ltd.
Bangalore

[Nithya Jayakumar]

Dear Sriram and Chakri

My doubt arose exactly for the same reason that Chakri has quoted.  There is a contrary opinion that since in an earlier instance we have taken shelter under the same reason that private company being a subsidiary of public company for waiving applicability of Section 297, Section 292A should be made applicable.

Members views solicited.

Regards
J. Nithya

[Prasenjit Sarkar]

Dear Nithya,

 

U can see th eprovision of Sec 292A only puts compulsion upon a public comapny with a paid up capital of 5 crore or more to constitutr an Audit Commiitee, there is no requirement on a private comapny which is a subsidiary of a public company with paid up capital of 5 crore or more to constitute the audit committee other wise it was mentioned in the provisions itself like the other provisions which are not applicable to private companies whether subsidiaries of public companies of public companies or not:

Section 70-Prohibhition of allotment before Registration of statement of Statement in lieu of prospects with RoC, Section 81- manner in which subscibed shares can be increased for Issue of further shares, Section 149- Restriction on commencement of business, Section 165- statutory meeting and statutory report, Section 219-right of a member to copies of Balance sheet and Auditors report.  Section 266- consent and qualification shares for directors, Section 284- removal directors holding directorship for life prior to 1952

Warm Regards


Prasenjit Sarkar
Company Secretary

 

On 4/19/10, Nithya Jayakumar <nithyaj...@gmail.com> wrote:

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[Amarendra]

Dear Nithya

 

I m agree with prasenjit bcoz the section 292A:Every public company having paid up capital rs 5.00cr......................so it is not applicable to private Company which is a subsidiary of public company.

 

u can get in provision of various section that mention "PRIVATE COMPANY WHICH IS SUBSIDIARY OF PUBLIC COMPANY"

 

In that case u can consider private company, BUT NOT IN PRESENT CASE

 

Any contrary view solicitated

 

Regards

Amar

[SUNIL KUMAR B.G.]

I second the views of Mr.Chakri, Mr.Amarendra and Mr.Prasenjit.


Warm Regards,

Sunil Kumar B.G.
Practicing Company Secretary
B.B.M.,A.C.S.
Mysore
+91-9945653732
http://cssunilbangerabg.blogspot.com/