Companies Act 2014 section 114

Holding by subsidiary of shares in its holding company

Section 114 sets out the conditions under which a subsidiary company may acquire and hold shares in its holding (parent) company, including restrictions on funding, voting rights, financial reporting, and the authorisation process required.

• A subsidiary may acquire shares in its holding company, but only out of its distributable profits, and it must not exercise any voting rights attached to those shares.
• Both the subsidiary and the holding company must authorise the acquisition contract in advance, and the rules governing own-share purchases (sections 105 and 107) apply with necessary modifications.
• When calculating the subsidiary's distributable profits for this purpose, pre-acquisition profits attributable to shares the holding company holds in the subsidiary must be excluded.
• This section does not apply where a subsidiary already holds shares in its holding company under the circumstances permitted by section 113, and it does not limit the prohibition in section 102(4) on certain share subscriptions by subsidiaries of public companies.