State Power Corp Private Limited was incorporated under the Companies Act, 2013 with 51% shares held by the Central Government to promote…

Provisions of Law: (i) Government Company [Section 2(45) of the Companies Act, 2013]: Government Company means any company in which not less than 51% of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and the section includes a company which is a subsidiary company of such a Government company. Analysis: In the instant case, 51% of the shares of State Power Corp Limited is held by the Central Government. Therefore, the company shall be treated as a Government Company. The fact that it is incorporated as a private company does not affect its status as a Government Company. Therefore, the contention of some directors that a private company cannot be a Government Company is incorrect. Conclusion: In view of the above, State Power Corp Private Limited is a Government Company under Section 2(45) despite being incorporated as a private company. Provisions of Law: (ii) Public Financial Institutions (PFI) [Section 2(72)]: A “PFI” includes institutions specified in Schedule I of the Act (like IDBI, LIC, UTI, IFCI, ICICI, etc.)-and such other institution as may be notified by the Central Government. A Government Company does not automatically become a PFI merely because 51% shares are held by the Central Government. Since State Power Corp Pvt Ltd was incorporated for infrastructure/IT purposes, there is no indication that State Power Corp Private Limited has been specifically established as a PFI under the Act or notified by the Central Government for this purpose, it cannot be regarded as a PFI. Hence, the view of the directors claiming it to be a PFI is not correct. Conclusion: In view of the above, State Power Corp Private Limited cannot be considered a Public Financial Institution. Provisions of Law: (iii) Dormant Company (Section 455): Where a company is formed and registered under this Act for a future project or to hold an asset or intellectual property and has no significant accounting transaction, such a company or an inactive company may make an application to the Registrar in such manner as may be prescribed for obtaining the status of a dormant company. "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. Analysis: Since State Power Corp Private Limited has neither conducted business nor filed the required returns during the last two financial years, it qualifies as an inactive company and is eligible to apply for the status of a Dormant Company.