Cross Holding 100%

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AMIT KEDIA (Querist)
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19 June 2010 Which Co. will prepare consolidated accounts in case of cross holding?

Example - A Ltd holds 100% shares of B Ltd. B Ltd also holds 100% shares of A Ltd.

Q- Which Co will prepare Consolidated Accounts A Ltd, B Ltd or Both?

CA KISHORE VANAMA

CA KISHORE VANAMA (Expert)
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19 June 2010 i think both has to prepare

Rasesh

Rasesh (Expert)
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21 June 2010 The above is never possible in law.

1) As per the Companies ACt, 1956, a company cannot holds its own shares. This kind of crossholding would mean that the companies are indirectly holding their own shares.

2) Assuming that one company (A) first acquired 100% shares in the other company (B). Then A becomes a holding company and B becomes the subsidiary. As per the Companies Act, a subsidiary company cannot hold voting rights in the holding company. Hence also the above is not possible.

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