Amended and updated notes on section 19 of Companies Act 2013. Detail discussion on provisions and rules related to subsidiary company not to hold shares in its holding company.
Chapter II (Sections 3–22) of the Companies Act, 2013 (CA 2013) deals with the provisions related to incorporation of company and matters incidental thereto. Section 19 of CA 2013 provides for subsidiary company not to hold shares in its holding company.
Recently, we have discussed in detail section 18 (Conversion of companies already registered) of CA 2013. Today, we learn the provisions of section 19 of Companies Act 2013 read with the Companies (Incorporation) Rules, 2014.
Section 19 of the Companies Act, 2013 has been notified by the Ministry of Corporate Affairs (MCA) vide Notification No. S.O. 2754(E) issued dated 12.09.2013. This notification was come into force from 12th September, 2013 i.e. the commencement date of section 19 is 12-9-2013.
| Name of Act | The Companies Act 2013 |
|---|---|
| Enacted by | Parliament of India |
| Administered by | Ministry of Corporate Affairs (MCA) |
| Number of Chapters | 29 |
| Number of Sections | 484 (470-43+57) |
| Number of Schedules | 7 |
| You are reading: | |
| Chapter No. | II |
| Chapter Name | Incorporation of Company and matters incidental thereto |
| Section No. | 19 |
| Section Name | Subsidiary company not to hold shares in its holding company |
| Monthly Updated Edition | Company Law PDF |
Section 19 of Companies Act 2013: Subsidiary company not to hold shares in its holding company
Section 19 shall come into force on 12th September, 2013 vide Notification No. S.O. 2754(E) dated 12.09.2013.
(1) No company shall, either by itself or through its nominees, hold any shares in its holding company and no holding company shall allot or transfer its shares to any of its subsidiary companies and any such allotment or transfer of shares of a company to its subsidiary company shall be void:
Provided that nothing in this sub-section shall apply to a case—
- (a) where the subsidiary company holds such shares as the legal representative of a deceased member of the holding company; or
- (b) where the subsidiary company holds such shares as a trustee; or
- (c) where the subsidiary company is a shareholder even before it became a subsidiary company of the holding company:
Provided further that the subsidiary company referred to in the preceding proviso shall have a right to vote at a meeting of the holding company only in respect of the shares held by it as a legal representative or as a trustee, as referred to in clause (a) or clause (b) of the said proviso.
(2) The reference in this section to the shares of a holding company which is a company limited by guarantee or an unlimited company, not having a share capital, shall be construed as a reference to the interest of its members, whatever be the form of interest.