Associated Enterprise

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

28 June 2011 ABC Pvt Ltd (Indian Co) has 2 directors, one being a resident Indian (Mr.A), the other person being a Non Resident (Mr.B).

Mr.B is also a Director in a Foreign Company (XYZ Company) which transacts with ABC Pvt Ltd.

Mr. B was Director of ABC Pvt Ltd , even before XYZ Company was formed.

Whether the 2 (ABC Pvt Ltd & XYZ Company) entities are associated enterprise or not?

CA Chandresh Agrawal

CA Chandresh Agrawal (Expert)
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28 June 2011 If Mr. B is executive director in both then it will make them associate.

Querist : Anonymous

Querist : Anonymous (Querist)

02 July 2011 I understand the logic behind your answer, but as per Section 92A(2)(e) & 92A(2)(f), which reads as follows
(e) more than half of the board of directors or members of the governing board, or one or more executive directors or executive members of the governing board of one enterprise, are appointed by the other enterprise; or
(f) more than half of the directors or members of the governing board, or one or more of the executive directors or members of the governing board, of each of the two enterprises are appointed by the same person or persons;

In my question, the shareholders are not common, and Mr. B was not appointed by the same persons, in the Indian Co., also Mr. B was not appointed by the Foreign Company, as it was formed after Mr. B became a director of Indian Co.

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CA Chandresh Agrawal

CA Chandresh Agrawal (Expert)
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02 July 2011 As per sec. 92A(2)(j)" where one enterprise is controlled by an individual, the other enterprise is also controlled by such individual or his relative or jointly by such individual and relative of such individual; or "

But no where meaning of control is defined under the act so if Mr. B is executive director in both the company or if it can be prove that he is actively engage in managing the company then it will make them associate enterprise.

CA Chandresh Agrawal

CA Chandresh Agrawal (Expert)
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02 July 2011 If u wish u can contact me at 09998072702 for more clarification on each clause but jst let me know before u call so tht we can talk in free time.

Querist : Anonymous

Querist : Anonymous (Querist)

02 July 2011 ok.. Thank you