Holding and Subsidiary Company: Companies Act, 2013

The Companies Act, 2013 defines the terms "Holding Company" and "Subsidiary Company" in Section 2(46) and Section 2(87) respectively.

A Holding Company is a company that holds a majority of the voting rights in another company, or controls the composition of the board of directors of another company.

A Subsidiary Company is a company in which the holding company holds a majority of the voting rights, or exercises control over the composition of the board of directors.

The Act lays down several provisions regarding the relationship between holding and subsidiary companies, some of which are:

1. Section 129(3): A holding company shall prepare a consolidated financial statement of itself and of all the subsidiaries in the same form and manner as that of its own financial statements.

2. Section 186(1): A company shall not make any investment in any other body corporate exceeding 60% of its paid-up share capital, free reserves and securities premium account, or 100% of its free reserves and securities premium account, whichever is more. However, a holding company can make an investment in its subsidiary company beyond these limits.

3. Section 379: A company can be wound up voluntarily if it is a wholly-owned subsidiary of another company or if it is a subsidiary of a company which itself is being wound up.

4. Section 372A: A holding company can acquire the shares of its subsidiary company through a scheme of arrangement or compromise between the two companies, subject to the approval of the National Company Law Tribunal.

These are some of the provisions related to holding and subsidiary companies under the Companies Act, 2013.