Section 42 and section 4

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mahender (Querist)
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30 March 2010 Company "A" has a subsidary company "B" w.e.f. 06-01-2010. "B" is also a shareholder in company "A" another company "C" also holds 49.5% shares of company "A"

As per Section 42(3) of Companies Act, 1956 "B" can't vote in the meetings of "A" if voting power of "B" is reduced from total voting power of "A", than voting power of "C" would be more than 50% to the remaing voting power of "A"

Would "C" be the holding company of "A" as per sectoin 4 of the Companies Act, 1956?

Jagruti (CS)

Jagruti (CS) (Expert)
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31 March 2010 Yes, 'C' can be considered as subsidiary of Company A as per Section 4(a).

As control means power of voting right to carry a resolution at a General Meeting of the Company.

hence if Company 'C' has independent power by which it can appoint or remove the whole or majority of the director on Board than Company A becomes subcidiary of Company C