Companies Act- Subsidiary/ Holding

[CA Rachit Agarwal]

As per Section 4 of the Companies Act, 1956 if the company holds more than 50% of the equity shares then such company would be holding company.

Whether Joint Venture company floated by different entities, and one venture partner holds more than 50%, then venture partner holding more than 50%, can it be termed as holding company.

AI Summary

Joint Venture Partner Holding Over 50% Shares May Not Qualify as Holding Company Under Companies Act, 1956. Under the Companies Act, 1956, a company is considered a holding company if it owns more than 50% of the equity shares of another company. A query was raised about whether a joint venture partner holding over 50% in a joint venture can be termed a holding company. The response clarified that only an entity recognized as a company under the Companies Act, 1956, can be a holding company, and this includes bodies corporate. The status of the joint venture partner must be assessed to determine if it qualifies as a company under the Act.