Section 19 of CA 2013 : Section 19: Subsidiary Company Not To Hold Shares In Its Holding Company

Explanation using Example

Imagine that XYZ Pvt. Ltd. is a subsidiary of ABC Ltd. According to Section 19 of the Companies Act, 2013, XYZ Pvt. Ltd. cannot hold shares in ABC Ltd., its holding company. However, there are exceptions. For instance, if a shareholder of ABC Ltd. passes away and XYZ Pvt. Ltd. is the executor of the deceased's estate, it can hold the deceased's shares in ABC Ltd. as a legal representative. Additionally, if XYZ Pvt. Ltd. was already a shareholder in ABC Ltd. before it became its subsidiary, it can continue to hold those shares. In these cases, XYZ Pvt. Ltd. would also be allowed to vote at the ABC Ltd.'s meetings, but only in respect of the shares it holds in a fiduciary capacity or those held before becoming a subsidiary.