1. Holding Company–Subsidiary Relationship

• A private limited company can become a holding company by owning more than 50% of the share capital or controlling the board of another company
  
• The owned entity becomes a subsidiary company
  
• The relationship must be reported in statutory filings and financial statements
  

2. Forms of Ownership

• Full ownership (100% shareholding) results in a wholly-owned subsidiary
  
• Partial ownership (more than 50%) gives majority control
  
• Even minority investments (less than 50%) are allowed, creating associate companies
  

3. Purpose and Use Cases

• Useful for group structuring, investment management, or business diversification
  
• Allows a company to expand geographically or operationally while maintaining control
  
• Helps manage risk by separating different lines of business
  

4. Regulatory Compliance

• The ownership must be disclosed in ROC filings, annual returns, and consolidated financial statements
  
• Board resolutions and agreements are required for acquisitions
  
• Must comply with FEMA, SEBI, and competition laws if applicable
  

5. Restrictions and Limitations

• A private limited company cannot hold shares in another company in its own name if it is acting as a subsidiary of a public company, due to legal restrictions
  
• The transaction must not violate sectoral regulations, especially in regulated industries