Question of the Day : If a Subsidiary Company increases its Authorised and Paidup Share Capital without Knowledge of Holding Company just to dilute the sharholding percentage. Kindly inform what are the precautions in legal terms to be taken by a Holding Company to Control the increase or decrease the Paid up as well as Authorise Share Capital in its Subsidiary Companies.
Answer : Under the Company Law, the authorised capital of the company can be increased at the EGM of the shareholders by passing a ordinary as well as special resolution. Under the circumstances, a subsidiary company can not increase the authorised capital on its own or without the consent of Holding company. However in case of increase of paid up capital by the subsidiary company within the limit of authorised capital, the holding company can take the precaution by having control over the composition of board of directors of the subsidiary company.
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