X Ltd. is an Indian company, other than a company referred to in sub rule (2) of Rule 2 of the…
The Companies (Restriction on Number of Layers) Rules, 2017 allow two layers of subsidiaries; Y Ltd. is the first layer and both Z Ltd. and the proposed K Ltd. would sit at…
Choose your answer
X Ltd. is an Indian company, other than a company referred to in sub rule (2) of Rule 2 of the Companies (Restriction on number of layers) Rules, 2017 which relates to the "Restriction on number of layers for certain classes of holding companies". X Ltd. has a wholly owned Indian subsidiary Y Ltd. Y Ltd. has another Indian subsidiary Z Ltd. and it owns 60% of its total share capital. Y Ltd. now seeks to form another Indian subsidiary K Ltd. Which of the following is correct?
Answer and explanation
Correct answer B
The Companies (Restriction on Number of Layers) Rules, 2017 allow two layers of subsidiaries; Y Ltd. is the first layer and both Z Ltd. and the proposed K Ltd. would sit at the second layer, so no additional layer is created and "Y Ltd. is permitted to have K Ltd. as its subsidiary."
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