26 July 2025
This is a very practical question involving **shareholder rights** under the **Companies Act, 2013** (since the Companies Act, 1956 was repealed in 2013). Here’s the detailed answer to your query:
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## ✅ **Question:**
Can a **shareholder (even holding 1 share)** of a **holding company** demand the **balance sheet or annual reports of its subsidiary companies**?
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## ✅ **Short Answer:**
**Yes**, a shareholder of the **holding company** can request **financial information of subsidiary companies** — **but** only to the **extent disclosed in the consolidated financial statements**.
The **Companies Act, 2013** provides **limited rights** to shareholders for accessing subsidiary information.
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## 📘 **Relevant Legal Provisions:**
### 🔹 **Section 136(1) of the Companies Act, 2013** (as amended)
> "Every company shall, at least 21 days before the annual general meeting, send a copy of the **financial statements**, including **consolidated financial statements**, **auditor’s report**, and **other documents** to **every member** of the company..."
So:
* The holding company is **required to send** its own **standalone and consolidated financial statements** to its shareholders. * The **consolidated financial statements (CFS)** include **subsidiary data in aggregated form**, **not the full balance sheet** of each subsidiary.
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### 🔹 **Rule 5 of Companies (Accounts) Rules, 2014**
It clarifies the **availability of subsidiary financials** to shareholders:
> "A company shall provide a copy of the separate audited financial statements of its **subsidiary companies** to any shareholder of the company **on demand**."
✅ **This is key!** So, under the rules:
* **Any shareholder** (even with **1 share**) of the holding company has the **right to demand the full audited financials of the subsidiary**. * The company **must provide it**, although usually it can be done **on request**, and possibly **at a nominal cost** (e.g., printing or mailing).
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## 🧾 **Summary:**
| Issue | Answer | | -------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------- | | Can a shareholder of a holding company demand the balance sheet of a subsidiary? | ✅ Yes | | Is there a minimum shareholding required? | ❌ No minimum; even 1 share is sufficient | | Legal Basis | 📘 Section 136(1) of the Companies Act, 2013 and 🧾 Rule 5 of Companies (Accounts) Rules, 2014 | | Mode of sharing | On written request (usually physical or email); the company may charge nominal cost |
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## 📌 Practical Tip:
* The shareholder should make a **written request** (email or physical letter) to the **Company Secretary** of the holding company. * The company must respond **promptly**, ideally within **7–10 working days**, depending on internal policy.
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Let me know if you’d like a **sample shareholder request letter** format or a response draft from the company!
CAclubindia
