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Can a holding co dispose shares of its subsidary co.

ashwin (student) (49 Points)

28 May 2011

Hi every one i have a small doubt whether a holding co which is a public ltd co. sell the shares of a private ltd co which is a subsidary of the Holding co. to outsiders or share holders of holding co. are there any conditions to be satisfied?

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3 Replies

Naresh Kumar (student) (51 Points)
Replied 20 June 2011

Hi,

In my openion, the holding company does not have it self the power to sell the shares of its subsidiary company. It can do so if it is mentioned in the aoa of the subsidiary company that the holding co. can sell its shares or the subsidiary co. has passed the resolution that the mgt of the holding co. can sell its shares.

CS Nadeem Ahmed Siddique (Company Secretary) (354 Points)
Replied 20 June 2011

"Spin Off" is the strategic term implemented by the Holding Companies inorder to distribute the shares (among it's shareholders) held by it in the Subsidiary Company. These shares may be distributed in lieu of profits.