XY Ltd. is the holding company of Z Ltd. Can Z Ltd acquire shares of its holding company XY Ltd.? Advise as a practicing Company Secretary.

Section 19(1) of the Companies Act, 2013 provides that a subsidiary company shall not either by itself or through its nominees, hold any shares in its holding company and no holding company shall 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. The reference in the above mentioned section w.r.t. the shares of a holding company which is a company limited by guarantee or an unlimited company, not having a share capital, shall be construed as a reference to the interest of its members, whatever be the form of interest. Therefore, no subsidiary company shall hold any interest in its holding company. However, following are the circumstances where a subsidiary company can hold the shares of its holding company: Where the subsidiary company holds such shares as the legal representative of a deceased member of the holding company; or Where the subsidiary company holds such shares as a trustee; or Where the subsidiary company is a shareholder even before it became a subsidiary company of the holding company. Accordingly, in the present case Z Ltd. cannot acquire shares of its holding company XY Ltd.