Public or Private

Dear Neeta,

According to your quote it seems that this NRI becomes a shareholder as nominee of the body corporate.  if yes then its not a 4(7) company.

if not then its a 4(7) company.

Other views are solicited.

As per section4(7) A  private company, being a subsidiary of a body corporate incorporated outside India, which (Body corporate incorporated outside india), if incorporated in India, would be a public company, shall be deemed (private company) 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.

Thus, your company shall be deemed to be subsidiary of a public company. 

thanks for the reply sir , but is that mean if a foreign co has even one percentage share in a pvt co , that co will automatically be called as the sub of public co , it isn't digesable !!!

the section says " if the entire share capital is not held by that foreign co ". can u plz quote any example u dealt with .

i think we re some where , we need an amendment( or explanation) in law , if what we are intending is right ?

thanks and regards

Neeta.

Agree, I have also objection with the word Not. The word not should not be there

hey friends,

Excuse me! This section does not define holding- subsi relationship. The section 4(1) is the basic provision to determine the holding-subsi relationship.

Sec. 4(7) has the object to bring India private company with in the ambit of  same regulatory provision as public company.

Hello Neeta,

Your thinking is correct that if a foreign co has even one % share in a pvt co., that co will automatically be called as the sub of public company. Further let me tell you there are various drafting errors in Companies Act, 1956.

In this way I also agree with Mr. Srivastava.

Regards

Kindly appreciate further that first it is very difficult to interpret the second line of the section 4(7) which goes as follows “if incorporated in India, would be a public company,”

However if you can prove that foreign company, if incorporated in India would not be a Public company, then exit route is very much available to you and you can easily escape from section 4(7).

As per my understanding a professional with good foreign law knowledge can easily prove that a particular foreign company, if incorporated in India would not be a Public company.

Best Regards

yes , very true ankur sir , der r drafting errors and also the interpretation is difficult , definetly tat might be the exit route.

i ve found pvt cos with foreign shareholding moving as pvt only. if any body has came across any case in respect of sec 4(7) , plz let us know.

thanks to all for the replies !

regards

neeta 

Completely agree with Mr. Ankur.