Under Section 2(87) Companies Act 2013, a company is a 'subsidiary' of…

Question

Under Section 2(87) Companies Act 2013, a company is a 'subsidiary' of another company if the other company:

Accepted Answer

A. controls the composition of its Board of Directors OR holds more than half of its total voting power (or holds more than half via subsidiaries)

1. Section 2(87) defines 'subsidiary company': 'a company in which the holding company — (i) controls the composition of the Board of Directors; or (ii) exercises or controls more than one-half of the total voting power either at its own or together with one or more of its subsidiary companies'.
2. The Companies (Amendment) Act, 2017 amended sub-clause (ii) to substitute 'total voting power' for 'total share capital'.
3. 'Composition of Board' is controlled if appointment of all or majority of directors can be made or removed by the holding company.
4. Hence option B is correct.
_Source: Companies Act 2013 (Act 18 of 2013), Govt. of India MCA — Companies Act 2013, Section 2(87)_

Answer

holds at least 26 per cent of its paid-up share capital, regardless of board control (cf. Companies Act 2013, Section 2(87))

Answer

is incorporated in the same State as the alleged subsidiary at the date of the transaction (cf. Companies Act 2013, Section 2(87))

Answer

is recognised by SEBI as a 'group company' under any extant securities regulation (cf. Companies Act 2013, Section 2(87))