XYZ HOLD SHARE OF "LAG" COMPANY 13%, XYZ HOLD 92% SHARE OF "LMN" COMPANY, LMN HOLD 40% OF LAG COMPANY.
WHETHER XYZ IS HOLDING CO OF LAG COMPANY.
12 Replies
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 03 September 2021
Yes because XYZ has 92% control over lmn.
The profits/incomes from it will be reported as per NCI.
It’s a related party as well.
But XYZ has no control over lmn.
LAG company is not a subsidiary, neither is lmn company, so XYZ cannot be called as a holding company.
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 03 September 2021
Sorry I meant XYZ is holding company for LMN. LMNis not holding to LAG. XYZ is not holding to LAG.
MUKESH GOYAL
(SERVICE)
(46 Points)
Replied 03 September 2021
Why xyz not holding co for LAG hold 13% directly and 40% indirectly
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 03 September 2021
Because it is not a subsidiary. It purchased 13% shares meaning, investment. You need to have >50% to be called as subsidiary
MUKESH GOYAL
(SERVICE)
(46 Points)
Replied 03 September 2021
Mr. Gomes, 13 % directly hold share by xyz to LAG, in addition to that 40% hold through its subsidiaries of LMN of LAG shares.
XYZ is hold directly 13% of LAG and Balance 40% through its subsidiaries. it means controlling intrest of XYZ in lag i s exist
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 03 September 2021
Your thinking right, but investment interest is different from having control. Every year they get income from 13%. Besides, LMN will show this 40% as associate. While consolidating, its impossible to club them together.
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 03 September 2021
Section 2(46) of the Companies Act, 2013 defines Holding Company. The company is said to be the holding company if that particular company holds/owns at least 50% of the other companies
CS Divesh Goyal
(Practicing Compnay Secretary)
(50535 Points)
Replied 06 September 2021
Practically, Its not Holding Company.
CS Divesh Goyal
(Practicing Compnay Secretary)
(50535 Points)
Replied 06 September 2021
You have to check the definition of Holding Company.
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 06 September 2021
It is a simple view from the definition that it should have the authority to make management decisions, influences and controls the company’s board of directors. A holding company may exist for the sole purpose of controlling and managing subsidiary companies. When we all know FTVPL investments lack for 13% investment interest. An associate is measured at cost or FVTPL as well and sometimes it is not c silicates when associate does not distribute its profits to holding company, or associate will be disposed in the future.
https://blog.ipleaders.in/difference-between-holding-and-subsidiary-company/amp/
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 14 September 2021
Https://cleartax.in/s/indian-subsidiary-registration
Hi, I came across this resource which is useful to resolve your query.
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 02 October 2021
1) D has 3 wholly-owned subsidiary who hold 30% each in P, but D has no holding in P. How should P be consolidated?
D exercise control over more than 50% of total voting power of P, indirectly through D’s wholly-owned subsidiaries. Therefore, irrespective of whether or not A exercises any direct control over the operations of P, D would have to consolidate P directly as a subsidiary, in preparing its CFS.
Hope we get better references. This is how it is, it is not holding but will consolidate.
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