Before Amendment

Holding company in relation to one or more other companies, means a company of which such companies are subsidiary companies

After Amendment

Holding company in relation to one or more other companies, means a company of which such companies are subsidiary companies

The expression company includes ‘Body Corporate’

ANALYSIS

A holding company, in relation to one or more other companies, was defined under the 2013 Act as a ‘company’ of which such companies are subsidiary companies. The term ‘company’ refers to a company incorporated under the 2013 Act or any previous company law and does not refer to an entity incorporated outside India. Accordingly, while Indian companies qualify as subsidiaries of foreign holding companies as per the definition of subsidiary under the 2013 Act, foreign holding companies were not covered within the ambit of the definition of holding company.

The CLC in its report observed that though this was a minor anomaly, it could lead to uncertainties in ascertaining the status of a foreign holding company and in determining the applicability of the 2013 Act to such a company.

The Amendment Act has therefore introduced an explanation to the definition of holding company to clarify that a holding company includes any body corporate.

Accordingly, Foreign companies which meet the prescribed test under the 2013 Act will consequently qualify as holding companies