Definition of subsidiary

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Dharmishta Tank (Querist)
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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

Vikas Garg (Expert)
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25 March 2008 I just want to clarify that its 50% or more.

Dharmishta Tank

Dharmishta Tank (Querist)
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25 March 2008 it is exactly 50%

CA Praveen Chopra

CA Praveen Chopra (Expert)
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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

Devendra Mishra (Expert)
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25 March 2008 > then 50%

R.V.RAO

R.V.RAO (Expert)
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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

CA Saurabh Maheshwari (Expert)
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25 March 2008 MORE THAN 50 % DOES NOT AT ALL MEANS 50 %