Companies act- holding & Subsidiary status
Prashant
(Querist) 11 August 2009
This query is : Resolved
Suppose A Pvt Ltd holds say 50% of shares in B Pvt Ltd. Since holding of A Pvt ltd is not more than 50% it cannot become the holding company of B Pvt ltd u/s 4 of the companies act. So how can it become the holding company by having the management control because since share holding is insufficient how one can take control on the board especially when there are only 2 shareholders involved i.e. in the present case A Pvt Ltd holds 50% & say C Pvt Ltd holds 50% share capital of B Pvt Ltd then if A pvt Ltd wants to have holding status of B then how can it acquire management control.
Thanks in advance
A V Vishal
(Expert) 11 August 2009
One way is to increase the shareholding by 1% so that the B co becomes a subidary of A company, incase that is not possible then increase the number of directors of A company on the board of B company so they have more say in the management.
Manish Singh
(Expert) 12 August 2009
Dear Mr. Prashant,
please go through the wordings of Section 4 wherein it says that a company shall be meant a subsidiary of another whn the other company controls the mangement and board of directors.
please take note that applicabilty of either Subclause A or B is needed for a company to be contained under the section and definition as the subclauses are separated by the word "or" and not "and"
so even if subclause A suits the situation the compny shall be held as a subsidiary of another without following provisions of subclause B
but for clause to
