Query relating to shareholding pattern

This query is : Resolved

PRATICK SAHA (Querist)
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27 July 2013 ABC Pvt Ltd is a private company registered in India.
It has issued 100 shares. Out of which the 99 shares are held by XYZ Ltd which is a company registered in Mauritius and 10 shares are held by XYZ Ltd and By Mr. Ram (Indian Individual) Jointly.
My query is that can such type of shareholding pattern is correct as per Companies Act 1956.
Because XYZ Ltd percentage of holding has become 100%
Our auditors have raised objection in such type of shareholding pattern.
They have advised us to make Mr. Ram as first holder of the shares which are jointly held by XYZ Ltd and Mr. Ram.
Kindly advice as what shall I do.

CA. SHIVA SHANKARA R. SHETTY

CA. SHIVA SHANKARA R. SHETTY (Expert)
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27 July 2013 As per Article 66 of First Schedule to the Companies Act, 1956 the director has to hold atleast one share in the company. However, articles of association may prescribe more shares.
In case articles of the company doesn't state about minimum qualification shares, then holding one share is enough.
As per my opinion, Mr. Ram can hold only one share in his name.
I seen in may companies, MD holds only one share and other shares held by the foriegn holding comapny.

In case, articles state more qualification shares, then shareholders can alter the article.