Silk Segment Private Ltd. (SSPL) is a wholly owned subsidiary of Silk Block Ltd. (SBL) a listed public limited company. The Board of Directors of…

(a) (i) According to section 2 (71) of the Companies Act, 2013, (the Act) a Public Company means a company which— (a) is not a Private Company; and (b) has a minimum paid-up share capital as may be prescribed: Provided that, a company which is a subsidiary of a company, not being a private company, shall be deemed to be a public company for the purposes of this Act even where such subsidiary company continues to be a private company in its Articles. As per section 2 (51) of the Act, Key Managerial Personnel (KMP), in relation to a company, includes the Chief Financial Officer. According to section 67 (2) of the Companies Act, 2013, Public Company shall not give any financial assistance: Whether directly or indirectly and whether by means of a loan, guarantee, the provision of security or otherwise.For the purpose of, or in connection with, a purchase or subscription made or to be made, by any person of or for any shares in the company or in its holding company. As per section 67 (3) of the Act, a company may provide the financial assistance, in case of lending money by a company to its employees (other than its directors or key managerial personnel), not exceeding six-month salary of the employees to enable them to buy or subscribe fully paid shares in the company or its holding company and to hold them by way of beneficial ownership. In the given question, Silk Segment Private Ltd. (SSPL) is a wholly owned subsidiary of Silk Block Ltd. (SBL). Thus, SSPL will also be deemed as a public company [by virtue of Section 2 (71) ]. Hence, considering the above provisions we can answer the following to the questions asked: (i) Mr. Sohan is the Deputy Marketing Manager of SSPL; hence loan may be provided to him upto the limit of his 6 months' salary i.e.6,00,000. Thus, proposal to grant loan of 15,00,000 to Mr. Sohan for purchase of shares in SBL is not valid. Ms. Subarna is a KMP (being the Chief Financial Officer of SSPL), hence, proposal to grant loan to her for purchase of shares in SBL is not valid. (ii) Section 67 of the Act shall not apply to private companies in whose share capital no other body corporate has invested any money. In case where Silk Block Ltd. (SBL) held only 25% shares of Silk Segment Private Ltd. (SSPL), the latter would not be termed as a subsidiary of the former and hence would not be a deemed public company. It will still be regarded as a private limited company. Further, SBL is holding shares in SSPL, thus SSPL will not fall in the exempted class of private companies and accordingly, the provision of section 67 (3) of the Companies Act, 2013 shall apply. In view of the above provisions, the answer would remain the same in case only 25% shares of SSPL are held by SBL.