Holding and Subsidiary Company.

When the relationship between two companies is such that one of the companies is in a position to exercise a certain kind of control over the other company, the controlling company is known as the Holding Company. The controlled one is the Subsidiary Company of the Holding Company.
The relationship of Holding Company and Subsidiary Company may arise in any of the following ways.
1.	By control over the composition of the  Board of Directors in another company
2.	By holing more than half of the nominal value of the equity share capital of other company.
3.	Subsidiary  of a Subsidiary Company is the Subsidiary Company of the parent company
In determining the Holding Subsidiary relationship, the following points are very important to b3 considered.
a.	Any shares held or power exercised by a company in a fiduciary capacity shall be treated as not held or exercised by it.
b.	Any shares held or power exercisable
		i.	By a person as a nominee for a company;
		ii.	By or by a nominee for, a subsidiary of a company.
	This provision is subjected to the below given provisions c and d.
c.	Any shares held by virtue of the provisions of any debenture of the company or of a trust deed for securing the issue of such debentures shall be disregarded; and
d.	Any shares held by way of security only for the purpose of a business transaction entered into in the ordinary course of business shall not be treated as so held by that other company.
Some important points:
A Subsidiary Company cannot be a member of a Holding Company
But Section 42 of the Companies Act, 1956 provides that, where it was before it become a Subsidiary Company, it shall not have any voting right at a meeting, though it may have other rights of members.