Vivek Limited is holding 58% of the paid up share capital of Brain Limited. Vijay, one of the shareholders of Vivek Limited, holding 10% shares of…

(a) According to section 19 of the Companies Act, 2013 a company shall not hold any shares in its holding company either by itself or through its nominees. Also, holding company shall not allot or transfer its shares to any of its subsidiary companies and any such allotment or transfer of shares of a company to its subsidiary company shall be void. Following are the exceptions to the above rule— (a) where the subsidiary company holds such shares as the legal representative of a deceased member of the holding company; or (b) where the subsidiary company holds such shares as a trustee; or (c) where the subsidiary company is a shareholder even before it became a subsidiary company of the holding company but in this case, it will not have a right to vote in the meeting of holding company. In the given case, one of the shareholders of holding company (Vivek Limited) has transferred his shares in the holding company to a trust where the shares will be held by subsidiary company (Brain Limited). It means now subsidiary will hold shares in the holding company. But it will hold shares in the capacity of a trustee. Therefore, we can conclude that in the given situation Brain Limited can hold shares in Vivek Limited.