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Definition of subsidiary (Corporate Law)

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This query is : Resolved



( Author )
25 March 2008

Please clarify! The Companies Act,1956 defines subsidiary.A company which holds more than 50% of the voting power or equity capital of other company,that other company is the subsidiary of the first mentioned company.But if a company holds just 50%,then would that be considered as subsidiary!!!


Vikas Garg

( Expert )
25 March 2008

I just want to clarify that its 50% or more.


Dharmishta Tank

( Author )
25 March 2008

it is exactly 50%


CA Praveen Chopra

( Expert )
25 March 2008

As per section 4(1)(b)(ii) of the companies act 1956, if a company holds more than half in the nominal value of equity share capital of another company,than such another company is a subsidiary of first mentioned company.The wording of section i.e.more than half,clearly says that it is more than 50% & not exactly 50% even.


Devendra Mishra

( Expert )
25 March 2008

> then 50%


R.V.RAO

( Expert )
25 March 2008

IT IS MORE THAN 50% OF SHARE CAPITAL OR VOTING POWER WHICH IS REQUIRED TO BE HELD BY ANOTHER COMPANY TO BECOME A SUBSIDIARY OF THAT COMPANY AS PER SEC 4 OF COS ACT.
R.V.RAO


CA Saurabh Maheshwari

( Expert )
25 March 2008

MORE THAN 50 % DOES NOT AT ALL MEANS 50 %


MANAS ROUT

( Expert )
25 March 2008

it should be more than 50%.


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