What is Group Company?

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 March 2010 Hello All,

Can u please explain what constitutes a group co.?
For ex. A Co., B Co., C Co., are subsidiary of D co., then is D Co. is a group.
Now if, D co., and E Co. are subsidiary of F Co. Then F Co is Group.

Question > Will A, B ,C co. are part of the F Group Co. or not??

What Group means in light of the above example?

Regards

Querist : Anonymous

Querist : Anonymous (Querist)

10 March 2010 In my opinion, for Consolidation A, B &C will merge in D Co. and D& E co. will merge in F Co..
So F Co. is ultimately the Group Co. of A, B, C, d & E Co.

Experts views are solicited.........

Ashwani Garg

Ashwani Garg (Expert)
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10 March 2010 My view is A group co. comprises of all direct & indirect subsidiary's co. So F Co. is termed as Group co. here for all the companies.

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Jagruti (CS)

Jagruti (CS) (Expert)
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13 March 2010 In Companies Act, Group is not defined However under MRTP ACt,

The IRDA (Investment) Regulations, 2000 as amended from time to time, under Regulation 2 (ca) defines “Group” as under:

(i)Two or more individuals, associations of individuals, firms, trusts, trustees or bodies corporate (excluding Financial Institutions) or any combination thereof, which exercises, or is established to be in a position to exercise, control, directly or indirectly, over any body corporate, firm or trust; or

ii)Associated persons.

And, An inter-connected undertaking means two or more undertakings which are inter-connected with each other in any of the following manner, namely:-

(i)if one owns or controls the other,

(ii)where the undertakings are owned by firms, if such firms have one or more common partners,

(iii)where the undertakings are owned by bodies corporate -

(a)if one body corporate manages the other body corporate, or

(b)if one body corporate is a subsidiary of the other body corporate, or

(c)if the bodies corporate are under the same management, or

(d)if one body corporate exercises control over the other body corporate in any other manner;

(iv)where one undertaking is owned by a body corporate and the other is owned by a firm, if one or more partners of the firm –

(a) hold, directly or indirectly, not less than 50% of the shares, whether preference or equity, of the body corporate, or

(b)exercise, control, directly or indirectly, whether as director or otherwise, over the body corporate,

(v)if one is owned by a body corporate and the other is owned by a firm having bodies corporate as its partner, is such bodies corporate are under the same management

(vi)if the undertakings are owned or controlled by the same person or by the same group

(vii)if one in connected with the other, either directly or through any number of undertaking which are inter connected undertakings within the meaning of one or more of the foregoing sub-clauses.

Thus in your case, A, B ,C co. are part of the F Group Co.

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Ashwani Garg

Ashwani Garg (Expert)
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13 March 2010 i have one more query about this issue.

In the financial Institution there is exposure norms fixed for every individual company as well as for the Group. For e.g the exposure norm say that limit for a single company is 10% of its networth and for 35% for the group.
In case D which is holding Company for A, B & C will it be constituted as group or F which is holding of all these will be treated as Group applicable for the exposure norms. Whether in that case in case of Company Individual norms or group norms are applicable.

Experts views are solicited.........

Querist : Anonymous

Querist : Anonymous (Querist)

13 March 2010 My understanding says that it depends on the company in question,
If in the given case the concerned co. is D, then Individual norms are applicable on A,B,C and Group norms on D

If in the given case the concerned co. is F, then Individual norms are applicable on A,B,C,D,E and Group norms on F.

Experts views are solicited....

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