Associate company [Section 2(6)]:
In relation to another company, means a company in which that other company has a significant influence, but which is not a subsidiary company of the company having such influence and includes a joint venture company.
The term “significant influence” means control of at least 20% of total share capital, or of business decisions under an agreement. [Section 2(6)]
The term“Total Share Capital”, means the aggregate of the -
(a) Paid-up equity share capital; and
(b) Convertible preference share capital.
This is a new definition inserted in the 2013 Act.
Vide General Circular no. 24/2014 dated 25th of June 2014, the Ministry of Corporate Affairs has clarified that the shares held by a company in another company in a ‘fiduciary capacity’ shall not be counted for the purpose of determining the relationship of‘associate company’under section 2(6) of the Companies Act, 2013.
The term “significant influence” means control of at least 20% of total share capital, or of business decisions under an agreement. [Section 2(6)]
The term“Total Share Capital”, means the aggregate of the -
(a) Paid-up equity share capital; and
(b) Convertible preference share capital.
This is a new definition inserted in the 2013 Act.
Vide General Circular no. 24/2014 dated 25th of June 2014, the Ministry of Corporate Affairs has clarified that the shares held by a company in another company in a ‘fiduciary capacity’ shall not be counted for the purpose of determining the relationship of‘associate company’under section 2(6) of the Companies Act, 2013.
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