Capital gain
This query is : Resolved
20 October 2013
what is the difference between holding company and subsidiary company??
explain with examples
20 October 2013
Sec 4 of the Companies Act, 1956
defines holding and subsidiary company.
With reference to this, holding company
is the one which acquires controlling
interest in another company by - (1)
acquiring more than 50% of equity
capital, (2) having such powers which
enables it to appoint or remove majority
directors on other company's board, or
(3) acquiring holding company of
another company through one of the two
modes above.
Hence holding company is the
controlling company whereas subsidiary
company is the controlled company. But
legally both are seperate entities and in
practical may just operate seperately
even in different lines of business.
defines holding and subsidiary company.
With reference to this, holding company
is the one which acquires controlling
interest in another company by - (1)
acquiring more than 50% of equity
capital, (2) having such powers which
enables it to appoint or remove majority
directors on other company's board, or
(3) acquiring holding company of
another company through one of the two
modes above.
Hence holding company is the
controlling company whereas subsidiary
company is the controlled company. But
legally both are seperate entities and in
practical may just operate seperately
even in different lines of business.
Nikhil Kaushik
(Expert)
20 October 2013
Sanket has given you the definition, lets take an example: Reliance Industries Limited
It owns more than 50% of companies such as:
Reliance Industrial Investments and Holdings Limited
Reliance Ventures Limited
Reliance Strategic Investments Limited
Reliance Industries (Middle East) DMCC
Reliance Retail Limited
So these companies are the subsidiaries and Reliance Industries Limited is the holding company.
To understand these concepts better, you should read annual reports of big companies such as ITC, reliance etc.
https://www.ril.com/rportal1/DownloadLibUploads/1368015904301_AR08052013.pdf
It owns more than 50% of companies such as:
Reliance Industrial Investments and Holdings Limited
Reliance Ventures Limited
Reliance Strategic Investments Limited
Reliance Industries (Middle East) DMCC
Reliance Retail Limited
So these companies are the subsidiaries and Reliance Industries Limited is the holding company.
To understand these concepts better, you should read annual reports of big companies such as ITC, reliance etc.
https://www.ril.com/rportal1/DownloadLibUploads/1368015904301_AR08052013.pdf
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