(c)MN Limited is engaged in the business of manufacturing and assembling of high end cars.
MN Limited holds 51% of Equity Capital in OP Limited. OP Limited holds 26% of Equity Capital in QR Private Limited and 52% of Redeemable Preference Shares in RS Limited. RS Limited holds 18% of Equity Capital in MN Limited (apart from this RS Limited does not have any control over MN Limited) and QS Auto LLP holds 26% Equity Shares in RS Limited.
75% stake in QS Auto LLP is held by EF Mauritius Limited, a Company incorporated in Mauritius.
Further, EF Mauritius Limited has invested ₹ 50 Crores in Non-Convertible Debentures of RS Limited. Apart from this, there is no direct or indirect connection between RS Limited and EF Mauritius Limited.
Considering the definition of ‘Group’ recommended by Cross Border Insolvency Rules/ Regulations Committee (CBIRC), answer with reasons which of the Companies/Corporate person stated in the question falls under the definition of ‘Group Companies’ and which of the Companies/Corporate person are not falling under the definition.
As per the recommendation of Cross Border Insolvency Rules/Regulations Committee (CBIRC)
“Group” means two or more corporate debtors that are interconnected by control or significant ownership.
“Control” includes the right to appoint majority of the directors or other key managerial personnel entitled to manage the affairs of the body corporate or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding, management rights, ownership interest, shareholders agreements, voting agreements, articles of association, limited liability partnership agreements or in any other manner.
“Significant Ownership” includes the right to exercise twenty-six per cent or more voting rights; In the given case, there are 2 groups.
Group – 1 consists of:
MN Limited, OP Limited and QR Limited all are directly connected through significant ownership Group – 2 consists of:
EF Mauritius Ltd., QS Auto LLP and RS Limited all are directly connected through significant ownership, but there is no connection between both the groups through significant ownership or control to the extent on available information.
Source: ICSI Guideline Answers, December 2024, Q. 3(c) (Syllabus 2022).