Company type

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Yousuf Ali SIlawat

Yousuf Ali SIlawat (Querist)
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15 November 2010 What is difference between Subsidiary company and Holding company?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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15 November 2010 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.

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