Narendra Motors Limited is a Government Company. Shah Auto Private Limited has share capital of ₹10 crore in the form of 10,00,000 shares of ₹100 each. Narendra Motors Limited is h... Narendra Motors Limited is a Government Company. Shah Auto Private Limited has share capital of ₹10 crore in the form of 10,00,000 shares of ₹100 each. Narendra Motors Limited is holding 5,05,000 shares in Shah Auto Private Limited. Shah Auto Private Limited claimed the status of Government Company. Advise as legal advisor, whether Shah Auto Private Limited is a Government Company under the provisions of Companies Act, 2013?
Understand the Problem
The question is asking whether Shah Auto Private Limited qualifies as a Government Company according to the Companies Act, 2013. This involves interpreting legal definitions and the specifics of shareholding.
Answer
No, Shah Auto Private Limited is not a Government Company.
No, Shah Auto Private Limited is not a Government Company.
Answer for screen readers
No, Shah Auto Private Limited is not a Government Company.
More Information
Under the Companies Act, 2013, a government company is defined as a company in which not less than 51% of the paid-up share capital is held by the government. In this case, although Narendra Motors Limited, a government company, holds 50.5% of Shah Auto Private Limited, this does not meet the requirement of not less than 51%, hence Shah Auto remains a private entity.
Tips
A common mistake is to assume that controlling stake of over 50% qualifies a company as a government company, but for this classification 51% or more is required.
Sources
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