10 October 2011
The company was a pvt ltd company as on 1st day of the FY. During the year it became subsidiary of a listed company. The Subsidiry's p&L a/c is debited with the mangerial remuneration for the year. What are the obligations to be followed by the company on becoming subsidiary, also what are formalities to be complied wit? Is sch-XIII is applicable in the case?
Please take note that if we read the provisions of section 3 (iv)of the Companies Act 1956..which includes subsidiary of public company under definition of public company...that means pvt ltd company which is subsidiary of public ltd is public ltd company....
Now the Honable Company Law Board in its Judgement provides that the basic character of the pvt ltd remains as it is in articles of association of the company and pvt ltd company can not offer its securities to the general pubic...as basic characteristic of the pvt ltd are not changed ...so it should be treated as pvt ltd company ...After becoming subsidiary company of public company still its securities are not marketable and should be treated as pvt ltd...
Now recently the Bombay High Court has given its judgement that in spite of the basic charcterstics of pvt ltd company the company which become subsidiary of public company will be treated as public company...
now come to your case....as soon as your company become subsi of public company provisions of section 198,309,269 all are attracted and the Company has to follow the provisions of schedule XIII of the act..
Also keep in mind the director taking remuneration from holding company does not entitle to take remuneration from the subsi of the same company...
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