The definition of related party includes any company which has substantial interest in any other company. Here, a person is deemed to have substantial interest in a business or profession if such person is the beneficial owner of at least 20% of equity capital or 20% of profits.
My query is that in case of chain holding, is the ultimate holding company a related party of all the companies down the subsidiary chain.
For example, if A ltd. holds 100% equity shares of B ltd. & B ltd. holds 80% equity shares of C ltd. In this can it be said that A ltd. is the beneficial owner of shares in C ltd. and therefore A ltd. & C ltd. are related parties as covered under this section?
CAclubindia
