A Widely-held Company is generally known as a company in which the public is substantially interested.
Definition of Widely Held Company:-
A company in which the public are substantially interested is defined under sub-section 18 of the Section 2 of the Income Tax Act, 1961.
A company is said to be a company in which the public are substantially interested, if it is -
- registered under section 25 of the Companies Act, 1956; or
- having no share capital and if, having regard to its objects, the nature and composition of its membership and other relevant considerations, it is declared by order of the Board to be a company in which the public are substantially interested; or
- a mutual benefit finance company, i.e. a company which carries on, as its principal business, the business of acceptance of deposits from its members and which is declared by the Central Government under section 620A of the Companies Act, 1956, to be a Nidhi or Mutual Benefit Society ; or
- a company, wherein shares (not being shares entitled to a fixed rate of dividend whether with or without a further right to participate in profits) carrying not less than fifty per cent of the voting power have been allotted unconditionally to, or acquired unconditionally by, and were throughout the relevant previous year beneficially held by, one or more co-operative societies ;
(1) a listed company - shares in the company are listed in recognized stock exchange;
(2) shares in the company - carrying not less than 50% of voting power - allotted unconditionally to, or acquired unconditionally by, and were throughout the relevant previous year beneficially held by -(a) the Government, or(b) a corporation established by a Central, State or Provincial Act,(c) any company to which this clause applies or any subsidiary company of such company if the whole of the share capital of such subsidiary company has been held by the parent company or by its nominees throughout the previous year.
As compared to closely held companies, there are more benefits to a widely held company under Income Tax Act. A widely held company is eligible for various tax concessions under the said act.