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what is pvt company, which is subsidiary of public company?

Meena Iaj (43 Points)

05 June 2007

what is pvt company, which is subsidiary of public company, aacording o companies act.

pls can anyone explain me the provision of sec 43a. of comp act

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5 Replies

Abhaysharma (CS) (53 Points)
Replied 11 June 2007

Such a pvt co. is treated as a public co. But it doesn't mean that it is a public co. It would continue to be a pvt co. It would be treated as a public co. only from the point of view of applicability of various provisions of the Act which are applicable to public. cos.

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Srivathsan Rangarajan (Chartered Accountant) (66 Points)
Replied 31 July 2007

Private companies enjoy a lot of relaxations under companies act. To avail of those relaxations certain public companies may set up private companies subsidiaries and divert the funds raised from public and thus escape the legislative scanner. To plug in that loop hole the legislators have made certain portions of the Act equally applicable to public companies and subsidiaries of public companies. This is the rationale for the whole set up. Where a company holds not less than 50% of the voting rights of a company; or controls the composition of the board or directors of a company then the other companuy is called a subsidiary of the former company. Also note that a subsidiary of a subsidiary is a subsidiary of the ulitmate holding company.