Holding-subsidiary

Section 19 is basically speaks about the holding of shares between the subsidiary company and its holding company.

Whether the Subsidiary Company can hold shares in Holding Company?

As per Section 19(1) of the Companies Act 2013, no company shall hold any shares in its holding company. Also, no holding company shall allot or transfer its shares to any of its subsidiary companies, if not, such allotment or transfer of shares to the subsidiary companies shall be void

 

Whether the Subsidiary Company can hold interest in Holding Company which is a company limited by guarantee or unlimited company, not having share capital?

As per Section 19(2) of the Companies Act 2013, no company shall hold any interest in its holding company.

What are the circumstances, a Subsidiary Company can hold the shares in its Holding Company?

As per the 1st proviso to section 19(1), the following are the circumstances, where a subsidiary can hold the shares of its holding Company:

1) in case, where the subsidiary company holds such shares as a legal representative of a deceased member of the holding company;
2) in case, where the subsidiary company holds such shares as a trustee;
3) in case, where the subsidiary company is shareholder even before it become a subsidiary company of the holding company;

Whether the subsidiary company have a right to vote at a meeting of the holding company, in the exceptional circumstances?

As per the 2nd proviso to section 19(1), the subsidiary company have a right to vote in cases, where it is acting as a legal representative of a deceased member or a trustee.

The subsidiary company shall not vote in case, where it holds the shares even before it become a subsidiary company of the holding company.