Consolidation
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
03 December 2016
Company x Ltd share in company Y Ltd is 48 %,
1 Director common in both the company has 20% share in company Y Ltd.
So whether Company X Ltd throught that director is considered as Holding for Consolidation.
Thanks & Regards
1 Director common in both the company has 20% share in company Y Ltd.
So whether Company X Ltd throught that director is considered as Holding for Consolidation.
Thanks & Regards
04 December 2016
Section 2(87)
"subsidiary company" or "subsidiary", in relation to any other company (that is to say the holding company), means a company in which the holding company—
(i) controls the composition of the Board of Directors; or
(ii) exercises or controls more than one-half of the total share capital either at its own or together with one or more of its subsidiary companies
Explanation:
(a) a company shall be deemed to be a subsidiary company of the holding company even if the control referred to in sub-clause (i) or sub-clause (ii) is of another subsidiary company of the holding company;
(b) the composition of a company's Board of Directors shall be deemed to be controlled by another company if that other company by exercise of some power exercisable by it at its discretion can appoint or remove all or a majority of the directors
Hence, in your situation there is no holding subsidiary relationship merely because of a common director and him being a shareholder of the other company.
"subsidiary company" or "subsidiary", in relation to any other company (that is to say the holding company), means a company in which the holding company—
(i) controls the composition of the Board of Directors; or
(ii) exercises or controls more than one-half of the total share capital either at its own or together with one or more of its subsidiary companies
Explanation:
(a) a company shall be deemed to be a subsidiary company of the holding company even if the control referred to in sub-clause (i) or sub-clause (ii) is of another subsidiary company of the holding company;
(b) the composition of a company's Board of Directors shall be deemed to be controlled by another company if that other company by exercise of some power exercisable by it at its discretion can appoint or remove all or a majority of the directors
Hence, in your situation there is no holding subsidiary relationship merely because of a common director and him being a shareholder of the other company.
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