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

Ravi Textiles Pvt Ltd is under investigation by an inspector appointed under the Companies Act, 2013. The inspector believes the affairs of Ravi Textiles' holding company are relevant to the investigation. What does Section 219 require before the inspector investigates the holding company's affairs?

The inspector needs the prior approval of the Central Government. Section 219 permits investigation of a holding or subsidiary company's affairs when necessary, but only with that approval. Approval from the Registrar, members or the holding company's Board is not what the section requires.

  1. APrior approval of the Central GovernmentCorrect
  2. BPrior approval of the Registrar of Companies
  3. CA special resolution of the members of Ravi Textiles
  4. DWritten consent of the holding company's Board

Explanation

Section 219 lets an inspector investigate a subsidiary, holding company or another subsidiary of its holding company where necessary for the investigation. This is subject to prior approval of the Central Government. The Registrar or member resolutions play no role in this power, which pierces the separate legal identity of related bodies corporate.

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