Case law

Anjana Ltd. is a subsidiary of Anjaani Ltd from 31st March 2016. Anjaana Ltd is holding some shares in Anjaani Ltd from 30th June 2016. Can it continue to hold it? Board of Anjana Ltd wishes to buy some shares on 25th April 2016. Can it do so?
Replies (4)
I believe there might be error in date's mentioned, please revise it if possible.
yes, it is 30 Jan 2016 not 30 June.
if we go with the dates as u mentioned in question then answer will be NO second situation .Generally subsidiary co cannot hold shares in holding co but it has certain exception
1) subsidiary co hold shares as legal representative of deceased member of holding co.
2) subsidiary co hold shares in holding co before the holding-subsidiary relationship comes into existence .
Conclusion- by applying the provisions of companies act we conclude that
1) subsidiary co can hold shares of holding co in first situation , but not in second situation
section 19 will be applicable in this case, which say a subsidiary co can't hold any share in its holding co accept
1) subsidiary holds such share before becoming subsidiary co of holding co
2 subsidiary co hold such shares as a legal representative of deceased member of holding co
3) subsidiary co holds such share as a trustee

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