Investment in holding company.. ?

Save Share

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 December 2011 Can a 100% wholly owned subsidiary company can invest in its own holding company either in the form of Equity / Preference ?. Or advise me in which form, it can invest in its Holding company ??>??. Answer for this Query is something urgent.. please.

Charu Srivastava

Charu Srivastava (Expert)

29 December 2011 no subsidiary can not invest in its holding..

CA Dileep Surya Kumar

CA Dileep Surya Kumar (Expert)

29 December 2011 No, can not. Section 42 of companies act specifically states that a body corporate can not become a member of its parent company except in a case where
-subsidiary acting as a representative of a deceased member of the holding company (or)

-acting as a trustee( or)

-it was a member in parent company either at the commencement of companies Act or before becoming a subsidiary of the holding company.

Parashar

Parashar (Expert)

29 December 2011 Section 42 of the Companies Act, 1956 prohibits the subsidiary to invest in holding company except in specified circumstances, as Surya explained.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now