Holding-subsidiary company- control of board composition

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CS Pravin

Asst Manager Secretarial

62 Points Posted on 05 March 2013

Dear All,

Kindly share your views on the following issue:

Facts of the case: A is a listed public limited Company. B is a listed public limited co which is also an associate company of A. A holds 47% stake in the equity capital of B.

There are 7 directors on the Board of B. Out of these 3 directors are employee of A and the MD of B is an ex employee of A. However, his appointment was also recommended indirectly by A.

There is no provision in the AOA of B regarding nominee director by A.

Query:

With reference to clause (a) & (b) of subsection 2 of Section 4, can we say that there is deemed control on the Board of B by A and thus B becomes the subsidiary Co.

Kindly help!

Regards

Pravin Satardekar

Replies (2)

pranit

66 Points Posted on 05 March 2013

No i dont think k B is sub. Of A. As A do nt hold more than hlf of equity n it also do nt control B's composition of board..... Thanx for raising query...... Pranit patil

CS Pravin

Asst Manager Secretarial

62 Points Posted on 06 March 2013

Originally posted by : pranit
	No i dont think k B is sub. Of A. As A do nt hold more than hlf of equity n it also do nt control B's composition of board..... Thanx for raising query...... Pranit patil

Thank you Pranit for your responce.

I have a different opinion on this. I feel B will become subsidiary of A. If we scrutinise the provisions of

cluase (a) & (b) of subsection 2 of section4, three of the directors of B are employees of A Thier appointment on the Board of B has preceeded their relationship with A. Subclause (a) also can be involved to prove this as these Directors would not have been appointed as Directors of B unless there is a consent from B as these are the employees of A.

Kindly advise!