Sahil sells by auction to Rohan a horse which Sahil knows to be unsound. The horse appears to be sound, but Sahil knows about the unsoundness of the…

(a) (i) 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, ABC Ltd. has allotted equity shares with voting rights to XYZ Limited of 15crore, which is less than requisite control of20% of total share capital (i.e.100 crore) to have a significant influence of XYZ Ltd. Since the said requirement is not complied therefore ABC Ltd. and XYZ Ltd. are not associate companies as per the Companies Act,2013. (ii) “Inactive company” means a company which has not been carrying on any business or operation or has not made any significant accounting transaction during the last two financial years or has not filed financial statements and annual returns during the last two financial years. [Explanation (i) to Section 455 of the Companies Act,2013] “Significant accounting transaction” means any transaction other than— (a) payment of fees by a company to the Registrar; (b) payments made by it to fulfil the requirements of this Act or any other law; (c) allotment of shares to fulfil the requirements of this Act; and (d) payments for maintenance of its office and records. [Explanation (ii) to Section 455 of the Companies Act,2013] In the instant case, MTK Private Limited was registered on 5th January, 2022 and did not start its business till31st July, 2024. Since the Company has not started its business and a period of more than two years has already elapsed, it will be treated as an inactive company.