Company availing right issue by subsidiary

when a subsidiary conpany issue right share then does holding company has to follow any procedure or pass any borad resolution to avail such right issue ???
Replies (1)

As far as right issue is concerned as a matter of issuance of securities to existing members of the Companies  is governed under section 62(1)(a) of Companies Act, 2013 read with relevant share capital rule 
For this transaction 
Here I am relying on following underlying assumption:
1.companies is PVT Ltd company
2.Companies is in under fully compliance with all the applicable laws 
As mention in the query itself another company(holding company) hold more than half of the share capital of the Company (subsidiary Co.) 
 subsidiary Company proposed to issue right issue to existing members including holding company as member of subsidiary company.
Compliance on the part of the subsidiary company shall be performed like
1.Board of Directors approve right issue U/S 179(3) 
2. issuance of letter of offer to all the member 
3.Amend MOA If Authorised share capital is not sufficient follow section 13, 61. 
4 . filing to ROC return of allotment 

Conclusion - in this case No Board Resolution required on the part of Holding company to avail right issue. Right issue is the return or offer received  on the basis of existing holding  of share. 

Another aspects  if this acquisition is considered as investment of the funds of the Companies then in that case company (holding Co.) needs to approve this in Board meeting itself under section 179(3)(e). 

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