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Why cant subsidiary company own shares of holding company?

Shlok Avlani (25 Points)

18 January 2018

Why cant subsidiary company own shares of holding company?

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Vishal Anand (16 Points)
Replied 18 January 2018

Section 19 of Companies Act clearly sets out tht no Company "shall, either by itself or through its nominees, hold any shares in its holding company and no holding company shall allot or transfer its shares to any of its subsidiary companies and any such allotment or transfer of shares of a company to its subsidiary company shall be void".

However, the proviso to this section says "a subsidiary company can hold shares in a holding company only if the subsidiary company was a shareholder in the holding company even before it became the subsidiary company of the Holding company "

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