MCA has received a number of representations consequent upon notifying section 2(87) of the Companies Act, 2013 which defines "subsidiary company" or "subsidiary". MCA has been asked to clarify whether shares held or power exercisable by a company in a 'fiduciary capacity' will be excluded while determining if a particular company is a subsidiary of another company. The stakeholders have further pointed out that in terms of section 4(3) of the Companies Act, 1956, such shares or powers were excluded from the purview of holding-subsidiary relationship. The Ministry has clarified vide Circular No. 20/2013 dated 27th December, 2013 that the shares held by a company or power exercisable by it in another company in a 'fiduciary capacity' shall not be counted for the purpose of determining the holding-subsidiary relationship in terms of the provision of section 2(87) of the Companies Act, 2013.
MCA has vide Circular No. 19/2013, dated 10th December, 2013 clarified the applicability of Section 182(3) of the Companies Act, 2013. With the coming into force of the scheme relating to ‘Electoral Trust Companies’ in terms of section (24AA) of the Income Tax Act, 1961 read with Ministry of Finance Notification No. S.O.309(E) dated 31st January, 2013 it will be expedient to explain the requirements of disclosure on part of a company of any amount or amounts contributed by it to any political parties under section 182(3) of the Companies Act, 2013.It is hereby clarified as under;
Companies contributing any amount or amounts to an .Electoral Trust Company' for contributing to a political party or parties are not required to make disclosures required under section 182(3) of Companies Act 2013. It will suffice if the accounts of the company disclose the amount released to an Electoral Trust Company.
Companies contributing any amount or amounts directly to a political party or paties will be required to make the disclosures laid down in section 192(3) of the Companies Act, 2013.
Electoral trust companies will be required to disclose all amounts received by them from other companies/sources in their Books of Accounts and also disclose the amount or amounts contributed by them to a political party or parties as required by section 182(3) of Companies Act, 2013.