Deemed public company

This query is : Resolved

Guest

Guest (Querist)

12 December 2012 Hi,

Someone may please clarify :

The Foreign company (incorporated outside India) is holding 99% of the paid up capital in the Indian private limited company.

Query

Whether the said Foreign company shall be treated as a deemed public company or not.

Ans : …………..

Thanks.

CS Amit Kumar

CS Amit Kumar (Expert)
Follow

12 December 2012 No, as per section 4(7) of CA,1956, Indian pvt co. would be deemed as subsidiary public Company if foreign co. fulfills the criteria of public co. and holds less than 100% share in Indian co.
so,only indian co. can be deemed public co., but not foreign co.

Guest

Guest (Querist)

13 December 2012 Thanks.

Further to my query, please see the following:

How can we identity the Foreign Corporation as a Private / Public Limited company, as if was incorporated in India ?

Ans : .................

If Indian Private Company becomes deemed public company consequent to the holding of 99% by Foreign Company, what are the steps to be taken or compliances to be done.

Ans : .................

Thanks in advance for replies.

Upgrade to CAclubindia Pro. Subscribe Now!

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
Follow

20 July 2024 Identifying a Foreign Corporation as Private or Public Limited Company:

1. **Foreign Corporation Classification**: The classification of a foreign corporation (i.e., whether it is considered a private or public limited company) typically depends on the laws of the country where it is incorporated. Here’s how you can generally determine this:
- **Articles of Incorporation**: Review the foreign corporation's articles of incorporation or equivalent founding documents. These typically specify the type of entity (private or public).
- **Public Disclosure**: In some jurisdictions, this information might be publicly available through corporate registries or equivalent authorities. Checking with the relevant authority where the foreign corporation is registered can provide clarity.

2. **Becoming a Deemed Public Company in India**:

When an Indian private company becomes a deemed public company due to the majority holding (99%) by a foreign company, certain steps and compliances are necessary:

- **Steps and Compliances**:
- **Alteration of Memorandum and Articles**: The company needs to alter its memorandum and articles of association to comply with the requirements of a public company under the Companies Act, 2013.
- **Change in Status**: Notify the Registrar of Companies (RoC) about the change in status from a private company to a public company. This involves filing Form INC-27 along with necessary resolutions and documents.
- **Compliance with Public Company Requirements**: As a public company, comply with additional regulatory requirements such as holding board meetings, conducting shareholder meetings, and other statutory obligations applicable to public companies.
- **Listing Requirements**: If applicable, comply with any listing requirements if the company's shares are to be listed on a stock exchange.

- **Specific Compliances**: Ensure compliance with specific provisions of the Companies Act, 2013, including:
- Appointment of independent directors.
- Holding of board meetings and general meetings.
- Compliance with corporate governance norms.
- Compliance with disclosure and reporting requirements.

- **Tax and Regulatory Implications**: Consider the tax implications and other regulatory aspects of being classified as a public company, which may differ from those applicable to private companies.

These steps ensure that the Indian company operates in accordance with the legal requirements applicable to a public company under Indian law. It’s advisable to engage with legal and financial professionals to navigate these changes effectively and ensure compliance with all regulatory requirements.