The Companies Act defines a public company to include a private company, which is subsidiary of a company not being private company. Foreign companies are not, and cannot be private company within the meaning of this Act. 1956 Act had a saving clause in sec 4 (7) whereby subsidiary of a foreign company would have been regarded as subsidiary of a private company based on the constitutional structure of such company. Besides, wholly owned subsidiaries were also protected. The new Act has dropped all those details, as the definition of subsidiary has been squeezed into a mere defining clause. The result could be a shell-shock to all FDI companies. Most of them, including companies with huge turnover, are private companies, but they all become deemed public companies under the new Act. If doing business in India was anyway difficult, imagine what this clause will do, and at a time when the country so badly needs FDI. My colleague Shambo Dey analyses the implications of this uncontemplated change of law: india-financing/images/Articles/FDI_Companies.pdf For more such discussions, join https://facebook/groups/337067759763667/
Posted on: Fri, 31 Jan 2014 01:58:09 +0000
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