Our Recommendations :-
Follow CA Final FB Page

Status of Deemed Public Company after commencement of Companies (Amendment) Act, 2000

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Uma asked almost 3 years ago

    0       0 Answer Now Comment Report
4 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 narahari answered over 2 years ago

Earlier, a private company could convert itself into a public company by operation of law under Section 43A. With the addition of Sub-section (11) to Section 43A the concept of deemed public company has been done away with. Hence, after the commencement of the Companies (Amendment) Act, 2000, a private company cannot automatically become a public company on account of Section 43A.

    0       0 Comment Report
Important Note – Preparing for CA Final?
CAKART provides Indias top faculty each subject video classes and lectures – online & in Pen Drive/ DVD – at very cost effective rates. Get video classes from CAKART.in. Quality is much better than local tuition, so results are much better.
Watch Sample Video Now by clicking on the link(s) below – 
For any questions Request A Call Back  
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 veeru answered almost 3 years ago

Earlier, a private company could convert itself into a public company by operation of law under Section 43A. With the addition of Sub-section (11) to Section 43A the concept of deemed public company has been done away with. Hence, after the commencement of the Companies (Amendment) Act, 2000, a private company cannot automatically become a public company on account of Section 43A. Accordingly, if a company which had become deemed public company by virtue of Section 43A of the Act, decides to become a private company after the commencement of the Amendment Act, such company shall pass an ordinary resolution for change in its name in the memorandum of association. Further, it shall pass a special resolution for alteration of its Articles of Association to contain provisions as per Section 3(1)(iii) including the newly inserted clause

    0       0 Comment Report
Open uri20170510 32134 s5bvk0?1494421637 ARJUN PRATAP SINGH answered almost 3 years ago

Dear Friend, as far as your query is concerned that Status of Deemed Public Company after commencement of Companies (Amendment) Act, 2000 Let me informed that The Companies Amendment Act, 2000 (hereinafter referred to as `amendment Act') has, except by inserting Section 192A (which is yet to be brought into effect by a notification), not made any substantial change in the provisions of the Companies Act, 1956 (hereinafter referred to as the `Act'). The earlier attempts by successive Governments to replace the Companies Act, 1956 with a new enactment appears to have been shelved for sentimental reasons. Most of the amendments under the amendment Act relate to enhancement of fine for default in complying with the provisions of the Act. But the amendment which has generated a lot of controversy is the amendment to Section 43A. By the amendment, sub-sections (2A) and (11) have been introduced to section 43A. Sub-section (11) reads as follows: Nothing contained in this section, except sub-section (2A), shall apply on and after the commencement of the Companies Amendment Act, 2000. The question that arises for consideration is whether the introduction of this sub-section would automatically enable the existing deemed public companies revert to the status of a private limited company? It would be pertinent to note that the proviso contained in the sub-section (1), (1A), (1B) and (1C) permitted a private limited company, which had become a public limited company by virtue of the provisions of Section 43A, to retain the features of a private company. The object of the provision, then, was to treat large private limited companies as public limited companies. However, by the amendment, the provisions of the Section have been made inapplicable to private companies which could become public limited companies by virtue of sub-sections (1), (!A), (!B), & (!C) of Section 43A. Sub-section (2A), inserted by the amendment, reads as follows: (2A) Where a public company referred to in sub-section (2) becomes a private company on and after the commencement of the Companies (Amendment) Act, 2000, such company shall inform the Registrar that it has become a pubic company ..... " The department of Company affairs appears to be taking a view that by virtue of sub-section (11) all deemed public companies, existing on the date of the amendment, would automatically revert to the status of a private company and in order to facilitate this, sub-section (2A) has alone been made applicable after the amendment. This plausible view does not appear to be correct. The provisions of sub-section (11) has rendered inapplicable the provisions of section 43A after the commencement of the Amendment Act. However, the legislature has not thought it fit to delete the provisions of the section from the statute. The words used in sub-section (2A) only refers to a public company under sub-section (2) (a deemed public company) becoming a private company. This could not be interpreted to mean that a deemed public company automatically becomes a private company. Further, under sub-section (4), a deemed public company could become a private company with the approval of the Central Government and in accordance with the provisions of the Act. But sub-section (4) is inapplicable with the introduction of sub-section (11) pursuant to the amendment. Hence, in order to enable a deemed public company to become a private company, sub-section (2A) has been inserted. Moreover, sub-section (2A) uses the words .. "becomes a private company" ; this would mean a deemed public company which does not satisfy the criteria laid down in sub-sections (1), (1A), (1B) and (1C) . It cannot be interpreted to mean that an existing deemed public company would automatically become a private company on account of sub-section (11). It remains to be seen whether judicial interpretation by the Courts would take a similar view of the effect of the amendment to Section 43A. But the insertion of the sub-sections (11) and (2A) under Section 43A by the Amendment Act has left a lot to be desired. Hope answer was helpful to you Regards, Arjun Pratap Singh

    0       0 Comment Report
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 lochan answered almost 3 years ago

Earlier, a private company could convert itself into a public company by operation of law under Section 43A. With the addition of Sub-section (11) to Section 43A the concept of deemed public company has been done away with. Hence, after the commencement of the Companies (Amendment) Act, 2000, a private company cannot automatically become a public company on account of Section 43A. Accordingly, if a company which had become deemed public company by virtue of Section 43A of the Act, decides to become a private company after the commencement of the Amendment Act, such company shall pass an ordinary resolution for change in its name in the memorandum of association. Further, it shall pass a special resolution for alteration of its Articles of Association to contain provisions as per Section 3(1)(iii) including the newly inserted clause (d) pertaining to prohibition on invitation and acceptance of deposits. Thereafter, the company shall inform the ROC that it has become a private company and Registrar shall substitute the words “Private Company” for the words “Public Company” in the name of the company and make necessary alterations in the certificate of incorporation within four weeks from the date of the application. Alternatively, if the company (i.e. deemed public company) decides to remain a public company then such deemed public company shall have to increase its number of directors to at least three, and its members at least upto seven and alter its articles of association as applicable to a public company. Further, pursuant to sub-clause (c) of clause (iv) of Section 3(1) of the Act as amended vide Companies (Amendment) Act, 2000, a private company which is a subsidiary of a company which is not a private company shall become a public company on and from the commencement of the Amendment Act i.e. 13th December, 2000. Therefore, a private company which is subsidiary of a public company shall be a public company. Thanks

    0       0 Comment Report
Get Notifications
Videos
Books
Notes
Loading
SIGN UP
Watch best faculty demo video classes

These top faculty video lectures will
help u prepare like nothing else can.