<h1>Restriction on layers of subsidiaries limits holding companies to two non-wholly owned layers; exemptions and prospective filing required.</h1> The rule prescribes that most holding companies shall not have more than two layers of subsidiaries, excluding one wholly owned subsidiary layer from the count; investment company layering limits remain applicable and such subsidiaries count toward the layer calculation. Exempt classes include banks, systemically important NBFCs, insurance companies, and Government companies. Acquisition of foreign subsidiaries having downstream subsidiaries under foreign law is preserved. Existing holding companies with excess layers need not reduce them but must not add new layers and must file Form SDD-1 disclosing layers upon electronic filing availability.