General
Circular No.23/2002
F.No.
17/26/2002-C.L.V
Government of
India
Ministry of Finance and Company
Affairs
Department of Company Affairs
**********
Shastri Bhavan, New Delhi.
Dated the 30th of September, 2002
To
All Regional Directors
All Registrars of Companies
The Registrar of NCT of Delhi and Haryana has sought a clarification on
the applicability of Section 43A(2A) on the erstwhile deemed public companies
(when Section 43A was in operation prior to the Companies (Amendment) Act, 2000,
which came into force w.e.f. 13.12.2000), to those public companies which are
subsidiaries of foreign body corporates. The matter has been examined in the
Department.
2.
After amendment of the erstwhile Section 43A, since the provisions of
Section 4 of the Companies Act are independent, a private company, being a
subsidiary of a foreign body corporate, which, if incorporated in India, would
not be a public company. As such,
these deemed public companies are entitled to revert back to their initial
status of private limited companies as the effect of Section 43A has been
nullified by the amendment referred to.
3.
Section 4(7) of the Act was an exemption available to Indian private
companies when foreign body corporates were holding 100% share in them to retain
their "private" status. After amendment of Section 43A, such exemption is not
required. Therefore, applications under Section 43A(2A) shall be dealt with
independent of section 4(7) of the Act. The legal position in the above
circumstances would be that a private company would be the subsidiary of another
private limited company even if the holding company happens to be a foreign body
corporate and these companies do not need the exemption provided in Section 4(7)
of the Act. Therefore, the private company status of such companies is a
statutory one, and takes effect automatically. All that the company is required
to do is to make an application to the Registrar that the company has become a
private company and there upon the Registrar shall substitute the words "private
limited" in lieu of the words "public limited".
4.
Since no time limit has been prescribed in the statute for the companies
to revert back, the Department has already issued a departmental circular no.
3/2002 dated 24.7.2002 (F.No.17/4/2002-CL.V) (Copy Enclosed) wherein it has been
clarified that those companies which do not approach the Registrar of Companies
seeking reversion back to private company status, are deemed to have chosen to
remain as public companies.
5.
In the circumstances, it is hereby clarified, that in cases falling in
the above paragraphs, the Registrar is required to make the necessary
corrections in the certificate of incorporation within 4 weeks as from the date
of receipt of application from the company as provided in Section 43A(2A) of the
Act.
(E. Selvaraj)
Joint Director (T)
Copy for information to :-
All Chambers of Commerce,
FICCI, ICAI, ICSI, ICWAI, ASSOCHAM
(COPY)
No.17/4/2002-CL.V
Government of India
Ministry of Finance and Company
Affairs
5th Floor, "A" Wing, Shastri
Bhavan,
Dr. Rajendra Prasad Road, New Delhi-110
001.
Dated 24th July, 2002
To
Registrar of Companies
NCT of Delhi and Haryana,
New Delhi.
Subject:- Regarding new
provisions of Section 43A(2A) of the Companies Act, 1956.
...
Sir,
I am directed to refer to your letter No.TC/43A(2A)/3854 dated 23.1.2002
addressed to the Regional Director, Kanpur and copy endorsed to this Department
and to say that fixing of time limit for getting conversion by deemed public
company to private limited company under Section 43A(2A) of the Companies Act,
1956 may not be feasible. If a
public company, which had become a deemed public company under Section 43A of
the Companies Act when it was in force, does not approach for reconversion, it
is deemed to have chosen to remain as a public company.
Yours faithfully,
Sd/- (Thakur Sharan)
Under Secretary to the Govt. of India
(Te: 3389796)