Navigating the Legal Ambiguity: The Public-Private Status of an Indian Subsidiary of an Overseas Holding Company

The enactment of The Companies Act, 2013 has replaced The Companies Act, 1956. This has led to the evolution of the corporate landscape in India. The 2013 Act has tried to make Indian Company Laws at power with the Global standards, but it has furnished certain ambiguities in the legal framework. One of the areas where these ambiguities have arisen is the status of an Indian subsidiary of the overseas holding company. It has created obfuscated legal framework regarding the classification of private subsidiary to be deemed public or retain its status as private company. This paper seeks to examine the legislative provisions governing this classification with a focus on the background of The Companies Act, 1956, the omission of section 4(7) in The Companies Act, 2013 and clarification provided by the Ministry of Corporate Affairs in 2014. We will explore the implications of the “deeming” provisions that affect the governance and regulatory obligations of these subsidiaries and the holding companies, and further assess its broader legal ramifications.