Pct company subsidery of foreigner listed company

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 August 2013 My company is private Ltd company incorporated under companies Act 1956

Share holding patten

50% of Foreign listed Company

30% of Foreign Public Company

20% are indian

Now my Query is

Is my Company treated as Private Company or Public Company

CS Premjith

CS Premjith (Expert)
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24 August 2013 The company will be treated a s Private Company.

Section 4(7) of the Companies Act, 1956 lays down that "a private company, being a subsidiary of a body corporate incorporated outside India, which, if incorporated in India, would be a public company within the meaning of this Act, shall be deemed for the purposes of this Act to be a subsidiary of a public company if the entire share capital in that private company is not held by that body corporate whether alone or together with one or more other bodies corporate incorporated outside India."

For better understanding, an Indian Subsidiary of Foreign Public Company is not considered as a public company, if entire share capital of such an Indian Subsidiary is held by foreign company/companies incorporated outside India.

It is stated in the query that 20% stake is Indian and therefore the said company will be treated as a PRIVATE COMPANY only.

Querist : Anonymous

Querist : Anonymous (Querist)

27 August 2013 Thanks for the information provided.

But if the shares of Indian Comapny fully held by foreign national listed comapny / ies ??

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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09 August 2024 Given the information about your company's shareholding structure, here’s how it would typically be classified under the Companies Act, 1956:

### 1. **Is my Company treated as a Private Company or Public Company?**

- **Private Company**: According to the Companies Act, 1956, a company is considered a private company if it has a share capital and:
- It restricts the right to transfer its shares.
- Limits the number of its members to 50 (excluding employees and former employees).
- Prohibits any invitation to the public to subscribe for any shares or debentures of the company.

Since your company is a private limited company incorporated under the Companies Act, 1956, it will be treated as a private company as long as it adheres to the conditions set out in Section 3(1)(iii) of the Companies Act, 1956.

- **Public Company**: A public company is defined under Section 3(1)(iv) of the Companies Act, 1956, and includes any company that is not a private company. This means it can invite the public to subscribe to its shares and does not have restrictions on the number of members.

In your case, even though the majority of shares are held by foreign entities, as long as your company fulfills the criteria for a private company (such as restrictions on share transfers and not inviting the public to subscribe), it remains a private company.

### 2. **What if the shares of the Indian Company are fully held by foreign nationals or listed companies?**

- If an Indian company is fully held by foreign nationals or foreign listed companies, the classification of the company as private or public still depends on whether it meets the criteria under the Companies Act, 1956.

- **For a Private Company**: The presence of foreign shareholders does not change the classification as a private company if it continues to meet the criteria (restricting share transfers, limiting membership, etc.).

- **For a Public Company**: If the Indian company does not meet the criteria for a private company (e.g., it does not restrict the transfer of shares or invites the public to subscribe), it will be classified as a public company, regardless of the nationality of the shareholders.

### Summary

- Your company remains a **private company** if it meets the criteria for a private company under the Companies Act, 1956, despite having a majority of foreign shareholders.

- The nationality of the shareholders does not change the classification as long as the company continues to fulfill the criteria for a private company.

For any further specific clarifications or changes in regulations, particularly under the Companies Act, 2013 (which replaced the 1956 Act), it is advisable to consult with a company secretary or legal expert familiar with the latest legal provisions.