100% SUBSIDIARY

Hi

While incorporating a 100% subsidary, you need to give a board resolution for applying a name. in that you need to specify how the shareholding will be made.

Generally 99% on behalf of the holding company will be held by one director who is authorised by Board resolutiona and the other1 % will be held by another director of the holding company who is also authorised by the Board of directors. these two will be nominees of the holding company. you have to mention the same inthe subscripttion sheet also.

These two people will be considered as members.

section 49 requires shares to  be held in its own name ,but only for the purpose of minimum membership permits holding by holding co in the name of nominees. So in my opinion, entire share capital should be subscribed by holding company and allow only 1 share to be held by nominees .so 99% cannot be held by one director on behalf of holding company , only share of nominal value can be held by him. Experts can share there views.

It is not necessary  that 100% share should be held by a single company,  even if parts of share are held by nominee of A Ltd. for which A limited in beneficial holder, it shall be said that B Ltd is fully owned subsidiary of A ltd. 

In case of private company, whether it is holding company or subsidiary company should have minimum two shareholders.

For making wholly owned subsidiary, there is different way of making shareholding, but in case of minimum two member, the following structure you can apply:

1.     Company (XYZ Ltd)                                    75% or more or less

2.     Mr. S (Whether director or any person) hold as nominee of Company (XYZ Ltd.)  25% or more or less.

Regards

soory  i m not sure with my view....

Dear Friends,

"Wholly Owned Subsidiary" indicates 100% shares of the Subsidiary Company are held by the "Holding Company". But to ensure minimum number of  two Members of the Subsidiary , 'One'  share may be held by an individual or a Company as a Nominee of the Holding Company.

In respect of "One'" Share held through the Nominee , necessary compliance of Section 187C of the Companies Act,1956 is to be done.For this purpose Declarations in Form-I & Form-II of The Companies ( Declaration of Beneficial Interest of Shares) Rules,1975 are to be signed by the 'Nominee' and ' the Holding Company' respectively. The Subsidiary Company is to file Form-22B along with the scanned copies of above two declarations as attachments with ROC.

Regards,

Sunil K. Jain, FCS, AICWA, BAL, PGDFM

Practising Company Secretary

skj13 @ rediffmail.com, 9810104162

dear Mr.Jain,

can you give detailed note on incorporation of 100% subsidiary step by step to clear misunderstanding attached to this subject.

sudarshan s CA

Say capital of B is 10000 shars then arrange share holding as below

A ------------9999 equity shares

A jointly with Mr.X ---------------1 equity shares

It will serve your purpose without any compliance U/s 187C

Regards

Dear all

I agree with Mr. Sunil Kr. jain view. one shares will be held by nominee of holding Company and section 187 of the Act will have to be followed. advise of Mr. Sunil Prakash is normally followed by many companies in very casual way but it is not valid.

regrds

can some one elaborate how to make the other person or company as nominee of holding co. Is board resolution is enough or nominee has to give any consent.

sudarshan CA

Other person or company can be made as nominee by resolution. However if the company is made nominee then the resolution of that i.e. proposed nominee company is required giving authority to some person to sign on behalf of the company. no consent is required as the nominee will sign the document i.e moa & aoa

regards

Dear All,

                  Thank you very much for the valuable inputs. This is the best forum to interact and grow collectively. I would like to ask one more question.  The client has a 100% subsidiary, however, in forms 20B, 23AC etc, of the subsidiary, the no. of shareholders was being shown as 1 only. He had not shown in this any second person as joint holder or nominee. MCA has been accepting the forms and no action has been initiated.

Can you suggest the best way to rectify the problem now? Section 187C entails heavy penalties. Is there a way out?

Regards,

Dear Punnet

Please file forms u/s 187 with the additional fees as the RoC can take action for one member only. it is clearly a violation of Companies Act

In my view since at the time of incorporation, it is very clearly mentioned by subscribers who is actual owner and who is nominee as to the One share, therefore, a separate declaration is not neeeded. Likewise  on allotment of shares to suscribers to the memorandum no return of allotment in Form-2 is filed.