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Holding company

vijeesh V R (CA Final) (91 Points)

15 March 2012

An ABC company is having a share pattern as below

Share held by X co-95% and Y co-5% and each company appointed 3 directors each and chairman is also appinted by Y co

Whether Y company can be considered as a holding company of ABC in view of Control over BOD.

Please clarify

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3 Replies

Pankaj Arora (Learner) (3134 Points)
Replied 15 March 2012

yes ABC Co. Will be holding co. of X ltd. Because its hold more than 50 % shareholding.

prakash (Company Secretary) (1352 Points)
Replied 15 March 2012

According to sub-section 1, the composition of a company's Board of directors shall be deemed to be controlled by another company if, but only if, that other company by the exercise of some power exercisable by it at its discretion without the consent or concurrence of any other person, can appoint or remove the holders of all or a majority of the directorships:

According to the above provision Y cannot appoint or remove the directors without consent of X so that it cannot be subsidiary of ABC Company.

Please go through Shareholders agreement if any or AOA to know powers of Y to appoint or remove directors.