The paid-up equity share capital of ACD Ltd. is 80 crores & preference share capital of 20 crores. B Ltd. holds equity shares in ACD Ltd. worth…

As per Section 2 (6) of the Companies Act,2013, an Associate Company in relation to another company, means a company in which that other company has a significant influence, but which is not a subsidiary company of the company having such influence and includes a joint venture company. The term “significant influence” means control of at least20% of total voting power, or control of or participation in business decisions under an agreement. In the given case, the paid up share capital of ACD Ltd. is 80crores. B Ltd. holds equity share capital of 15crore in ACD Ltd. i.e. less than20% significant influence. Therefore ACD Ltd. cannot be considered as an Associate Company of B Ltd. Alternate conclusion Since the question is asked with reference to B Ltd. who had stake of 15crores in the ACD Ltd. to be considered as an associate company or not. So, the conclusion may be alternatively as follows: In the given case, the paid up share capital of ACD Ltd. is 80crores. B Ltd. holds equity share capital of 15crore in ACD Ltd. i.e. less than20% significant influence. Therefore, B Ltd. cannot be considered as an Associate Company.