Status of a subsidiary of a Foreign Company as per Companies Act, 2013
With the legislation of the new Act, it has been clarified that a body corporate incorporated outside India is not prohibited from incorporating subsidiaries as private/public companies. This implies that the earlier criteria (Sec 4(7) of the Old Act explained below) of automatically deeming certain private companies as public now cease to exist and a company’s status would be directly determined from the manner of its formation..
Status of existing subsidiaries
Further, existing private/public companies (subsidiaries) will continue to retain their status and the change in law will not affect them in any manner (MCA Circular No. 23/2014). This implies that deemed public companies under the old Act will continue with their tag of public company even though under the new Act they might be categorized as a private company..
Sec 4(7) of the Old Act
According to Sec 4 (7) of Companies Act, 1956 a private company (subsidiary) incorporated in India by a body corporate incorporated outside India would qualify as a public company if the following conditions were fulfilled:.