Reliable Ltd. holds 75% of the paid-up share capital in Trust Ltd. Board of directors of Trust Ltd. decides and resolves to hold 10% of the paid-up share capital in Reliable Ltd. The Board's proposal was also approved by

Section 19 of Companies Act, 2013 provides that no company shall, 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. Further this shall not apply in following cases: (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: In the present case Trust Ltd. is the subsidiary of Reliable Ltd. which is holding 75% of the paid-up share capital of Trust Ltd. It does not fall in any of the exceptions given above. A subsidiary cannot hold shares in its holding company. Hence, the objection raised by some of the members that company is in violation of the provisions of Companies Act, 2013 is correct.