SUBSCRIBE(free)-Daily Updates (Click Verification Link Received in Your Email)

Widely Held Company : Meaning and Definition


Meaning:- A Widely held Company is generally known as a company in which the public are 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 -

  • owned by Government or RBI or in which not less than 40% of shares are held (whether singly or jointly) by Government or RBI or a corporation owned by that bank (In case of an Indian company who is in the business of (1) construction of ships or (2) manufacture or processing of goods or (3) in mining or (4) in the generation or distribution of electricity or (5) any other form of power, item - it'll be 50%); or

     
  • 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 ; 
  • not a private company as defined in the Companies Act, 1956, and the conditions mentioned either in point (1) or (2) are satisfied : -
(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.
Tax Exemption

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.
Submit/See Comments With: or

No comments:

Post a Comment