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What is a Deemed Public Company? Explained with Examples

A Deemed Public Company is a company which is a subsidiary of a company, not being a private company.

Even where such subsidiary company continues to be a private company in its articles, it will be deemed to be a public company.


Companies Act, 2013

The Act does not specifically define the term - deemed public company.

Refer to the 'proviso' of sub-section (71) of section 2 of the Companies Act, 2013 to find out the meaning of deemed public company, which is explained at the top.


Scenarios / Examples

Case #1 : Deemed Public Company

OIU Limited is a public company.
FIG Private Limited is a private company.
FIG Private Limited is a subsidiary of OIU Limited.

In this case, FIG Private Limited will be deemed to be a public company.


Case #2 : Not a Deemed Public Company

LKJ Private Limited is a private company.
DSA Limited is a public company.
DSA Limited is a subsidiary of LKJ Private Limited.

In this case, LKJ Private Limited will not be deemed to be a public company.


Extra Notes

1) A deemed public company will have to comply with the provisions of the Companies Act and the rules made thereunder as if it is a public company. Even though it is a private company, it still has to comply as if it is a public company.

2) A deemed public company does not have to compulsorily convert itself into a public company just because it has gained the status of a deemed public company.

3) A deemed public company does not necessarily have to make alterations in its Memorandum and Articles of Association to make it the same as if a public company.

4) A deemed public company does not have to increase the shareholders' numbers up to seven as needed for a public company.

5) A deemed public company does not have to change its existing clauses of Articles as per section 2(68), regarding i. restricting the right to transfer securities; ii. limiting no. of shareholders to two hundred; and iii. prohibiting any invitation to the public to subscribe for any its securities.

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