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holding nd subsidiary company query

Tax queries 457 views 2 replies

There is One Company  A PVTLTD.

AUTHORISED S/C = 2 CRORES, PAID UP CAPITAL= 1 CRORE, RESERVES= 1.20 CRORE,

TURNOVER= MORE THAN 100 CRORES

The Shareholders in the company are:

MR W - DIRECTOR

MR X- DIRECTOR

MR Y,

MR Z

 

 

Now there is another company B PVT LTD

AUTHORISED S/C = 1 CRORES, PAID UP CAPITAL= 1.45 lacs , RESERVES= 70.00 lacs,

TURNOVER= around 25 CRORES

The Shareholders in the company are:

MR W

MR X- DIRECTOR

MR Y- DIRECTOR

MR Z- DIRECTOR.

 

 

WE WANT TO MAKE THE COMPANY B AS THE SUBSIDIARY OF COMPANY A.

QUES 1: WHAT IS THE METHODOLOGY OF MAKING CO. B AS SUBSIDIARY OF CO. A?

QUES 2:  AT WHAT RATE SHOULD MR W PURCHASE SHARES OF B PVT LTD TO MAKE IT A SUBSIDIARY OF A PVT LTD WITHOUT INCURRING ANY TAX DEFAULT.

 

KINDLY ADVISE.

Replies (2)

To make B ltd. a subsidiary co. of A ltd., A Ltd. has to purchase more than 50% share capital of B Ltd. Remember, shareholding of W,X,Y,Z doesnt matter in this case. The reason being that a company is different from its owners. Company has a separate entity. A person can be shreholder of many cos. but it dont make holding-subsidiary cos. relation. COMPANY has to purchase the shares.

I fully agree with Mr.Abhishek regarding a company become subsidiary when other company purchases more than 50% of its paid up capital

Regards


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