Investment in holding company.. ?

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

CA Dileep Surya Kumar

CA Dileep Surya Kumar (Expert)
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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)
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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.

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