The paid-up capital of Darshan Photographs Private Limited is 1 Crores in the form of 50,000 Equity Shares of 100 each and - 50,000 Preference…

(a) According to Section 2 (87) of Companies Act,2013 “subsidiary company” in relation to any other company (that is to say the holding company), means a company in which the holding company— (i) controls the composition of the Board of Directors; or (ii) exercises or controls more than one-half of the total voting power either at its own or together with one or more of its subsidiary companies: For the purposes of this section — (I) the composition of a company’s Board of Directors shall be deemed to be controlled by another company if that other company by exercise of some power exercisable by it at its discretion can appoint or remove all or a majority of the directors; (II) the expression “company” includes any body corporate; It is to be noted that Preference share capital will also be considered if preference shareholders have same voting rights as equity shareholders. In the instant case, Darshan Photographs Private Limited is having paid-up capital of 1Crores in the form of50,000 Equity Shares of 100each and - 50,000 Preference Shares of 100each. Shadow Evening Private Limited is holding - 25,000 Equity Shares in Darshan Photographs Private Limited. (a) On the basis of provisions of Section 2 (87) and facts of the given problem, Shadow Evening Private Limited is holding one – half of total equity paid up share capital of Darshan Photographs Private Limited. Therefore, Darshan Photographs Private Limited cannot be considered as subsidiary company of Shadow Evening Private Limited as for being subsidiary company other company should control more than one – half of the total voting power. (b) Answer would remain same even if Shadow Evening Private Limited is also holding - 5,000 preference shares as they do not have voting rights.