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 a Government Company. Advise as a legal advisor, whether Shah Auto Private Limited is a Government Company under the provisions of the Companies Act, 2013?
Understand the Problem
The question is asking whether Shah Auto Private Limited can be classified as a Government Company according to the provisions defined in the Companies Act, 2013. To solve this, we need to evaluate the shareholding structure and determine if the holding by Narendra Motors Limited qualifies Shah Auto Private Limited to be categorized as a Government Company.
Answer
No, Shah Auto Private Limited is not a Government Company.
No, Shah Auto Private Limited is not a Government Company because a government company must have 51% or more of its paid-up share capital held by the government. Here, Narendra Motors Limited holds 50.5% of the shares, which is insufficient to qualify as a Government Company under the Companies Act, 2013.
Answer for screen readers
No, Shah Auto Private Limited is not a Government Company because a government company must have 51% or more of its paid-up share capital held by the government. Here, Narendra Motors Limited holds 50.5% of the shares, which is insufficient to qualify as a Government Company under the Companies Act, 2013.
More Information
To be classified as a government company under the Companies Act, 2013, at least 51% of the paid-up share capital must be held by the government or government-owned entities. Shah Auto Private Limited does not meet this criterion.
Tips
A common mistake is incorrectly calculating the percentage of shares held by the government entity and assuming any majority stake qualifies a company as a government company.
Sources
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