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Chain Holding

sivaram (Asst Mgr-Taxation) (6918 Points)

01 February 2011

Can anyone explain what is meant by Chain Holding in Amalgamation,Absorption

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Suresh Prasad (www.aubsp.com) (15630 Points)
Replied 01 February 2011

Suppose that Company B is subsidiary of Company A and Company C is subsidiary of Company B.

By virtue of Section 4(1)(c) of the Companies Act, 1956 C becomes subsidiary of Company A. Popularly, Company C is called sub-subsidiary of Company A and the type of holding mentioned in Section 4(l)(c) is called chain holding. Chain holding may take various forms. In Type 1 the parent company does not hold any share in the sub-subsidiary. In Type 2 both the parent and subsidiary hold shares of sub-subsidiary. In Type 3 more than one subsidiaries of the parent company hold shares in the sub-subsidiary. There may be different other types of chain holding.

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sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 01 February 2011

Originally posted by : Suresh_Smiter
	Suppose that Company B is subsidiary of Company A and Company C is subsidiary of Company B. By virtue of Section 4(1)(c) of the Companies Act, 1956 C becomes subsidiary of Company A. Popularly, Company C is called sub-subsidiary of Company A and the type of holding mentioned in Section 4(l)(c) is called chain holding. Chain holding may take various forms. In Type 1 the parent company does not hold any share in the sub-subsidiary. In Type 2 both the parent and subsidiary hold shares of sub-subsidiary. In Type 3 more than one subsidiaries of the parent company hold shares in the sub-subsidiary. There may be different other types of chain holding.

Mr Suresh thanks for the answer but whether the same analogy holds good for Amalgamation ,Absorption Problems .Your refer problem 35 in M.P.Vijaykumars book and give the answer whether the same explanation holds good because there is no holding and subsidary companies