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neha (CS) (282 Points)

03 August 2011

Hi All,

query regarding section 187C we have 2 shareholders in our company:

Co.X holding 99.99%

Mr. A holding 0.01% (he is not a director)

so if we want to make our Co. as WOS of Co.X , what is the procedure??

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4 Replies

jeets (CS ) (461 Points)
Replied 04 August 2011

Hi,

The term "Wholly Owned Subsidiary Company" is neither defined in the Companies Act, 1956 nor under any other statute .As per the provision of the Companies Act, 1956, in no circumstances a person can hold 100% shares of a company.

In, M/s IJM (INDIA) INFRASTRUCTURE LIMTED reported in 2007 TMI (887) for seeking advance ruling for Applicability of Service Tax on Certain Issues, has held that to constitute a wholly owned subsidiary company, at least 99% of the shares of such company must be held by the Holding Company.

To conclude,In my opinion your company is already a wholly owned subsidiary..

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jeets (CS ) (461 Points)
Replied 04 August 2011

Further,

In your case..Mr. A is holding 1 share or 0.01% share. Mr. A is a shareholder.

Section 187c would be applicable only if Mr.A would have held the share as a Nominee for company X.

In such scenario you would require to file form 22B along with Form I and II.

Others view are solicited.

Thanks,

Regards.

neha (CS) (282 Points)
Replied 04 August 2011

Yes Mr.A is holding 0.01% shares.

Since we are going for merger my concern here was whether this holding of Mr.A will be a hurdle for merger of holding co with subsidiary co. As he is holding shares in his individual capacity.