Holding Company

Essay by 637896 July 2014

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Companies like person, may be related to each other. If there is a holding-subsidiary relationship, the companies are related under Section 6 Companies Act 1965 .Holding company is usually call parent company. Meanwhile, subsidiary company will be controlled and managed by holding company. In the real world, different country has different corporate law to define the term of becoming parent company. Section 5(1) state that a holding company is company that control the composition of board of directors, control more than 50% of voting power and hold more than 50% of issued share capital of subsidiary company which excluded preference shares. While Section 5(3) justified whether a company is a subsidiary of another company. When a company is control by a company which have most of the voting power and hold most of the issued share capital, that company is a subsidiary company.

Section 5A defined that a company can be an ultimate holding company of another company if another company is subsidiary of the holding company but the holding company is not a subsidiary of any company.

Under Section 5B, if none of the members is person other than its holding company, nominee of holding company, another wholly owned subsidiary of holding company or nominee of such wholly owned subsidiary, we can said that this is a wholly owned subsidiary of another corporation.

According to the ninth schedule subparagraph one of the Companies Act 1965, any document attached or profit or loss account of the holding company must disclose and state clearly such as the name, location of incorporation, ordinary activity or the holding company holding the number or amount of shares of each subsidiary company. Section 169(5) state that director of holding company have to prepare group account, also known consolidate account as which...