Page 41 - DCOM106_COMPANY_LAW

Company Law

Notes A company shall be deemed to have the power to appoint a person as a director in other
company in the following cases:
Where a person cannot be appointed thereto without the exercise in his favour by the
company of such a power of appointment.
Where a person’s appointment or directorship follows necessarily from his appointment
as director, or manager of, or to any other office or employment in the company.
Where a directorship is held by an individual nominated by the company or a subsidiary
thereof.

In determining whether one company is a subsidiary of another, following shall be disregarded:
Any shares held or power exercisable by the other company in a fiduciary capacity shall
be treated as not held or exercisable by it.

Any shares held or power exercisable in a company by any person under provisions of its
debentures or of a trust-deed for securing any issue of such debentures shall be disregarded.
Any shares held or power exercisable by, or by a nominee for a company or its subsidiary,
other than as in clause (2) above, shall be treated as not held or exercisable by it if the
ordinary business of that other company is lending money and the shares are held or
power is exercisable only by way of security in the ordinary course of business.
However, shares held or power exercisable by any person as a nominee of that other company
shall be treated as held or exercisable by the said company. Thus, the shares held or power
exercisable by a subsidiary shall be treated as ‘held’ or ‘exercisable’ by the holding company.
For example, ‘B’ and ‘C’, are subsidiaries of company ‘A’, and both of them hold together more
than half of the equity share capital of company ‘D’ then ‘D’ shall be deemed to be a subsidiary
of ‘A’ although it has not made any direct investment nor ‘B’ or ‘C’ singly hold more than 50%
shares, in the company ‘D’.

Self Assessment

7. Minimum number of members in case of public company is
(a) 1 (b) 2

(c) 5 (d) 7
8. Minimum number of members in case of private company is
(a) 1 (b) 2

(c) 3 (d) 4
9. Maximum number of members in case of private company is
(a) 50 (b) 100
(c) 150 (d) 200
10. Maximum number of members in case of public company is

(a) 0 (b) Unlimited
(c) 50 (d) 100

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