The Concept of Wholly Owned Subsidiary is an anti-thesis of the concept of the company. At least two persons are required to form a company which is true for wholly-owned subsidiary – but in case of wholly-owned companies one or more registered shareholder declare that one or more beneficial interests in their shares are with a particular company or body corporate.
Corporate world every holding company having a wholly-owned subsidiary have one or more person as “nominee” shareholders to on record as a registered shareholder holding a nominal number shares in a wholly-owned subsidiary company to satisfy the requirement of the minimum number of members. Treating these registered shareholders as “nominee” is not the perspective of the Company Law but of the Contract Law as applicable to the contract between the company and these shareholders. Let us discuss.
The concept of the wholly-owned subsidiary is best understood by layman than a young student of law – particularly of corporate law. The concept practically understood by professional dealing with a wholly-owned subsidiary. A student called me to understand this: “how possible?” I replied, “No, It is not possible in true sense.” Unless one understands it clearly that it is not possible in a true legal sense, only then, you can understand it. Once understood, you will never believe that a wholly-owned subsidiary is not possible in a true legal sense.
Clause 55 of Section 2 says that member in relation to a company means –
(a) the subscriber to the memorandum of the company who shall be deemed to have agreed to become member of the company, and on its registration shall be entered as member in its register of member;
(b) every other person who agrees in writing to become a member of the company and whose name is entered in the register of the company; and
(c) every person holding shares of the company and whose name is entered as a beneficial owner in the records of a depository.
On the other hand, a holder of a debentures is called a debentures – holder.
Posted in Chapter VI - CA2013, Companies Act 2013, Governance and Responsibility
Tagged Beneficial Interest, Beneficial Owner, Closing of Register, Companies Act 2013, Companies Bill 2012, CorpGov, CorpLaw, Corporate Governance, Corporate Law, Debenture – holders, Depository, Foreign Register, Index of members, India, Legal Reforms, Member, Ministry of corporate affairs, Nomination, Reforms, Register of Debenture – holders, Register of Members, Register of other security holders, Wholly Owned Subsidiary