1
Question
A company is a government company and X Co. is a subsidiary of A Co. then X Co. will be ________.
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Solution
The correct option is C government company
A “Government company” is defined under Section 2(45) of the Companies Act, 2013 as “any company in which not less than 51% of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company”. Thus, the cardinal feature of a government company is not less than 51% ownership by Central/state government, either individually or jointly. Also a company is said to subsidiary when the holding company controls more than 50% of shares which in case of government company makes the subsidiary also a government company.
A “Government company” is defined under Section 2(45) of the Companies Act, 2013 as “any company in which not less than 51% of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company”. Thus, the cardinal feature of a government company is not less than 51% ownership by Central/state government, either individually or jointly. Also a company is said to subsidiary when the holding company controls more than 50% of shares which in case of government company makes the subsidiary also a government company.
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