S Ltd. has equity shares with voting rights that are pari passu. X Ltd., Y Ltd., and Z Ltd. each hold 20% of the equity shares in S Ltd. The remaining 40% of the shares are held by retail investors. R Ltd. controls the c

As per Section 2(87) the Companies Act, 2013 a "subsidiary company" or "subsidiary", in relation to any other company (that is to say the holding company), means a company in which the holding company Controls the composition of the Board of Directors; or 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. Explanation: For the purposes of this clause - a company shall be deemed to be a subsidiary company of the holding company even if the control referred to in sub-clause (i) or sub-clause (ii) is of another subsidiary company of the holding company; 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; the expression "company" includes anybody corporate; "layer" in relation to a holding company means its subsidiary or subsidiaries. R Ltd. controls the composition of the Board of directors of X Ltd. Y Ltd. and Z Ltd. Therefore, these three companies are the subsidiary companies of R Ltd. The shareholding of X Ltd. Y Ltd. and Z Ltd. together in S Ltd. is 60%. As such, R Ltd. exercises or controls more than one half of the total voting power of S Ltd. through its subsidiary companies. Hence, R Ltd. qualifies as a holding company of S Ltd.