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Holding- subsidiary relationship

Deepti Aggarwal (Assistant Company Secretary) (143 Points)

18 October 2012

Dear All,

Plz Clarify me regarding the following:-

1) whether a prvate Limited Co. which is also holding Co. of Pvt Subsidiary is exempt from making consolidated Bsheet and other accounts and is yes, do this company have to make any compliance after becoming holding of Pvt Subsidiary:-

2) If we do not want to show the holding- subsidiary relationship then except showing transfer of shares to any other person to reduce the shareholding percentage, do we have any other option..???

Plz reply soon, its very urgent.....

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2 Replies

CAUTILITY.in (Student CA Final ) (35 Points)
Replied 18 October 2012

AS 21 simply states that where an enterprise / company elect to prepare CFS then it has to comply with AS21 unless any other requires a separate disclosure.

As per the existing norms, SEBI requires listed entities to prepare & publish CFS.

Accordingly, AS 21 does not exempt Private companies from its applicability.

Conclusion:

Where a Company [Public or Private] prepares CFS, it has to comply with AS 21 and related other Accounting Standards.

In the second case the only remedy lies is to issue further shares to one of the member such that to reduce the shareholding less then 51%.

Regards,

Hitesh K

www.cautility.in