UNIVERSITY OF PETROLEUM & ENERGY STUDIES

SCHOOL OF LAW

B. COM., LL.B. (HONS.) TAXATION LAWS

ACADEMIC YEAR: 2016- 21 SESSION: JULY-DECEMBER, 2018

ABSTRACT
FOR
Company law I
(LLBL421)
Under the Supervision of: Shruti Reddy

NAME: PARITOSH GARG

NITISH KUMAR NAVEEN
SAP NO: 500055096
500054889
ROLL NO: 066
063
 ABSTRACT

“Holding and Subsidiary Company”

According to S.2(46) & S.2(87) of Companies Act,2013 says company which controls another
company is known as Holding company, and the company so controlled is termed as Subsidiary
company. For instance, a Holding company (H LTD) & Subsidiary company (S LTD), H LTD
controls the composition of B.O.D of S Ltd, H Ltd hold more than 50% of share capital, and a
chain holding i.e. a subsidiary relationship. Real time examples of Holding and subsidiary
companies are – TATA(holding) – TATA CONSULTANCY SERVICE(subsidiary).

Section 4 of Companies Act 2013 talks about control which says a company shall be deemed to
control another company in each of the following cases: If it controls the majority composition
of the board of directors of another company. The composition of other company’s board of
directors shall be controlled, at its direction without the consent or concurrence of any other
person, appoint or remove the holders of all or a majority of the directorships; For the purpose of
control the company should hold more than half in of the equity shares of another company. A
company shall be deemed to be the holding company of another company if another company is
a subsidiary of the first mentioned company’s subsidiary (i.e. subsidiary of the subsidiary). Any
profit earned by subsidiary company before the date of acquisition is the capital profit and any
profit earned by subsidiary company after the date of acquisition is the revenue profits. The
holding and the subsidiary company may have a number of inter-company transactions. Some
are: Loan advanced by the holding company to the subsidiary company or vice versa, sale or
purchase of goods on credit by the holding company from the subsidiary company or vice versa
and debentures issued by one company may be held by the other.

Every holding company is required to attach to its annual accounts, copies of the Balance Sheet
and Profit and Loss Account, etc., of the subsidiary companies as per the requirements of
sections 212 to 214 of Companies Act, 2013.

Key Words

B.O.D – Board of Directors

Capital Profit

Revenue Profit