As per Section 19 of Indian Companies Act 2013 a subsidiary company cannot hold the shares of its holding company. Any such transfer is void. Provisions in the Indian Companies Act 2013 regarding holding of shares by subsidiary company of its holding company is as under.
(1) 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:
Provided that nothing in this sub-section shall apply to a case--
(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:
Provided further that the subsidiary company referred to in the
preceding proviso shall have a right to vote at a meeting of the
holding company only in respect of the shares held by it as a legal
representative or as a trustee, as referred to in clause (a) or
clause (b) of the said proviso.
(2) The reference in this section to 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.