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Share Capital in Holding co by its Subsidiary

11 December 2008

I want to know

Can a subsidiary company hold equity share capital or subscribe to Share Application money in Holding Company both companies being Private Limited Companies? Under which provisions is it governed? Transactions that a Subsidiary Company can enter into with a Holding Company, any list?

Please advise

Sameer

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6 Replies

Rupesh Maheshwari (ACA, Dip. IFR (ACCA)) (6166 Points)
Replied 11 December 2008

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FCS Jay (FCS ) (35 Points)
Replied 11 December 2008

Originally posted by :Sameer D Luthra

Subsidiary Company cannot become member of a holding Company except two cases mentioned in the Section 42 of the Companies. Hence, subsi cannot invest in the shares of holding co.

Share Application money is not considered as a share capital..and it is treated as loans and advances in the books of lender and current liability in the books of borrower..so there is no problem for giving share application to holding cos but it should not be converted into share capital of the holding co.

try and avoid this type of transactions instead other way outs like loan / share puchase should be considered

prakash m (Company Secretary) (50 Points)
Replied 19 December 2008

Can any one can tell me whether a director of the Holding Company (Pvt ) can hold shares in the subsidiary Company (Pvt) as a nominee of holding Comapny. under which section it is mentioned ?

Please help me ASAP

Purnima Singh (-) (38 Points)
Replied 19 December 2008

yes, the director of the Holding Company (Pvt ) can hold shares in the subsidiary Company (Pvt) as a nominee of holding Comapny.

For this, u can refer section 49(2) and 49(3) of the companies act, 1956

rameez (ipcc) (30 Points)
Replied 10 May 2012

company X want to make company Y as its subsidary company by issuing its shares to company Y instead of paying cash to the company Y for the purchase of its share ?

can this be possible under which section?

notify me i will be waiting for ur reply......