Question of the day


I found a question on the internet which voice out the cases like this:

If a subsidiary company increase its authorized and paid up share capital
without knowledge of holding company just to dilute the
shareholding percentage. Kindly inform what are the precautions
in legal terms to be taken by a Holding Company to Control
the increase or decrease the Paid up as well as Authorized Share
Capital in its Subsidiary Companies.

According to the law of company, the authorised capital of the
company can be increased at the EGM of the shareholders by
passing a ordinary as well as special resolution. At this kind of
situation, the authorised capital can not be increased by t
he subsidiary company on its own or without the consent of
the holding company. On the other hand, in the case of
increase of paid up capital by the subisidiary company
within the limit of authorised capital, precaution such
as by having control over the composition of board of
directors of the subsidiary company can be taken by
the holding company.