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CS Executive · Setting Up of Business, Industrial and Labour Laws · Corporate Entities - Companies

An inspector is investigating Kaveri Motors Ltd. Rohan Iyer was the managing director of Kaveri Motors in the past, and he also managed Sagar Logistics Ltd as its managing director at the same time. Under the provisions on related companies, what can the inspector do about Sagar Logistics, if he thinks it relevant?

The inspector may investigate Sagar Logistics with prior Central Government approval, because it was managed by the same person who was managing director of the company under investigation at the relevant time. Common management is a listed ground, so subsidiary status is not needed.

  1. AInvestigate Sagar Logistics only if it is a subsidiary of Kaveri Motors
  2. BInvestigate Sagar Logistics, with prior Central Government approval, because it was managed by the company's managing director at the relevant timeCorrect
  3. CInvestigate Sagar Logistics only after a special resolution of its members
  4. DNot investigate Sagar Logistics, as common management is not a ground

Explanation

Section 219(b) covers a body corporate that is or was at the relevant time managed by a person who was the managing director or manager of the company under investigation. Prior Central Government approval is needed. Subsidiary status is not required.

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