Companies Act 2014 section 113

Membership of holding company

Section 113 sets out the general prohibition on a subsidiary company being a member of its holding company, together with the exceptions to that rule and the consequences for voting rights and financial statement treatment.

• A subsidiary cannot generally be a member of its holding company, and any allotment or transfer of shares to a subsidiary is void
• Exceptions exist where the subsidiary acts as personal representative or trustee, where membership pre-dates the restriction, or where shares arise from a bonus capitalisation at no cost to the subsidiary
• A subsidiary that is a member of its holding company has no right to vote at meetings of the holding company, except where it holds shares in a trustee or personal representative capacity
• The accounting treatment of any shares lawfully held by a subsidiary in its holding company is governed by section 320, which also restricts distributable profits by reference to that treatment