WHOLLY-OWNED SUBSIDIARY

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 June 2011 Hi,

Please Clarify

A Pvt. Ltd. company has 99.99% of its Paid-up Capital held by another Pvt. Ltd. company and remaining 0.01% by another Pvt. Ltd. company?

Can the company holding 99.99% of the paid-up share capital be called wholly-hold subsidiary of the earlier company?

Please provide solution at the earliest...

CA Harish Suwalka

CA Harish Suwalka (Expert)
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23 June 2011 The term "Wholly Owned Subsidiary Company" is neither defined in the Companies Act, 1956 nor under any other statute which refers this term for the purpose of "Advance Ruling"

As per the provision of the Companies Act, 1956, in no circumstances a person can hold 100% shares of a company.

Now, the Advance Ruling Authority (AAR), New Delhi, while disposing the application of M/s IJM (INDIA) INFRASTRUCTURE LIMTED reported in 2007 TMI (887) for seeking advnacr ruling for Applicability of Service Tax on Certain Issues, has held that to constitute a wholly owned subsidiary company, at least 99% of the shares of such company must be held by the Holding Company.

Querist : Anonymous

Querist : Anonymous (Querist)

23 June 2011 Is there any provision in Companies Act saying that 100% control is required?

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CA Harish Suwalka

CA Harish Suwalka (Expert)
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23 June 2011 see the modified post, you make me to work 2 hrs for your query but happy to get the answer