Kiran Shinde (Accountant) (46 Points)
13 July 2009Private Limited company has become a subsidiary company of Public Limited company. and the Private Limited Company becomes the Public Limited company as per Section 3.
Now Holding company has sold the shares of subsidiary Company.
Can anybody tell me that now the subsidiary company becomes independent company and does that subsidiary (private limited company) becomes independent private limited company?
Kiran
Ekta
(Practicing CS)
(423 Points)
Replied 13 July 2009
As per my knowledge, it will remain Private Company since it will no more cover under Section 3, and no any holding company is there.
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 14 July 2009
Hi Kiran,
Find below the relevant extract of section-4 which governs holding and subsidiary relationship:
4. Meaning of "holding company" and "subsidiary"
(1) For the purposes of this Act, a company shall, subject to the provisions of sub-section (3), be deemed to be a subsidiary of another if, but only if –
a) that other controls the composition of its Board of directors; or
2[(b) that other –
(i) where the first-mentioned company is an existing company in respect of which the holders of preference shares issued before the commencement of this Act have the same voting rights in all respects as the holders of equity shares, exercises or controls more than half of the total voting power of such company;
(ii) where the first-mentioned company is any other company, holds more than half in nominal value of its equity share capital; or]
c) the first-mentioned company is a subsidiary of any company which is that other's subsidiary.
In your case I am presuming that public company was holding more than half in nominal value of equity share capital of private company due to which such private company becomes a public company as per section 4.
And now Holding company has sold the shares of subsidiary Company. Here I am presuming that stake is less then 50% nominal value of equity share capital of private company. In this situation we can say that public company status of such private has lost and again it becomes a purely private company.
Best Regards
RAHUL
(Company secretary )
(226 Points)
Replied 15 July 2009
Dear friend
If a holding company sold all shares in subsidiary company then subsidiary company is treated as normal pvt company
but in other this case other some condition are require to full fill if you want any claasification any query you send me email on my email. my email. id is nitinagarwal113 @ gmail.com
REGARD
CS NITIN
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