Wholly Owned Subsidiary

Payal Jain (CS) (152 Points)

27 October 2010

Dear Members,

Plz help me on this matter: A Ltd Co wants to form a wholly owned subsidiary (Pvt. Ltd. Co.).So my querry is

1. How co can form wholly owned subsidiary

2. After formation of Pvt Ltd Co. is it necessary to fulfill public co requirements like 3Directos, 7 members etc.

Plz suggest me....... its urgent.......

Regards,

Payal

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6 Replies

Ajay Mishra (Company Secretary) (74302 Points)
Replied 28 October 2010

For formation of private limited company there is need to have minimum 2 members. For incorporating a wholly owned subsidiary, i will suggest you to have minimum two shareholders for this purpose A limited hold 100% shares and subscribe memorandum by as company itself and nominee on behalf of the company.

In short a company can incorporate wholly owned subsidiary through itself alongwith its nominee.

There is no need to increase no. of members upto seven.

Regards

K Mohamed Ibrahim (Company Secretary) (104 Points)
Replied 28 October 2010

In my view, you can refer Section 187C

Payal Jain (CS) (152 Points)
Replied 28 October 2010

Thanks Mr. Ajay for your rpl.

but i have one querry:

If A Ltd subscribe 100% shares then how there will be 2 subscribers in the Company.??

Another point is that u told me that subscribe the shares in the name of the company and nominee on behalf of the company. But i have a doubt that In MOA which name we will show as subscriber i.e. A Limited or its nominee. And if we show the name of the nominee then which another agreement/document should we attach with the form.

2231S (Company Secretary) (53 Points)
Replied 28 October 2010

Wholly owned subsidiary of a public company is a public company by virtue of sec3(1)(iv).

So you need to necessarily have 7 members. The shares can be held by 6 individuals as nominees of the holding company. In the MOA u need to mention their names as nominees alongwith holding company name. U need not have any agreement / any other document supporting this. After incorporation u need to comply with the provisions of Sec 187C.

Regards,

Prajakta

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