Cross Holding 100%
This query is : Resolved
AMIT KEDIA
(Querist)
19 June 2010
Which Co. will prepare consolidated accounts in case of cross holding?
Example - A Ltd holds 100% shares of B Ltd. B Ltd also holds 100% shares of A Ltd.
Q- Which Co will prepare Consolidated Accounts A Ltd, B Ltd or Both?
Example - A Ltd holds 100% shares of B Ltd. B Ltd also holds 100% shares of A Ltd.
Q- Which Co will prepare Consolidated Accounts A Ltd, B Ltd or Both?
CA KISHORE VANAMA
(Expert)
19 June 2010
i think both has to prepare
21 June 2010
The above is never possible in law.
1) As per the Companies ACt, 1956, a company cannot holds its own shares. This kind of crossholding would mean that the companies are indirectly holding their own shares.
2) Assuming that one company (A) first acquired 100% shares in the other company (B). Then A becomes a holding company and B becomes the subsidiary. As per the Companies Act, a subsidiary company cannot hold voting rights in the holding company. Hence also the above is not possible.
1) As per the Companies ACt, 1956, a company cannot holds its own shares. This kind of crossholding would mean that the companies are indirectly holding their own shares.
2) Assuming that one company (A) first acquired 100% shares in the other company (B). Then A becomes a holding company and B becomes the subsidiary. As per the Companies Act, a subsidiary company cannot hold voting rights in the holding company. Hence also the above is not possible.
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