RELATED COMPANY

SECTION 5
Refer it to a corporation which is a subsidiary of another corporation or be offer being
the holding company.
Under section 5(1)(a) a corporation is deemed to be subsidiary of a holding company, if
the holding company, with respect to the subsidiary:
Control the composition of
the board of directors of
the subsidiary company.
Under s5(2), the
composition of the board
Control more than half of
director is deemed to be
the voting power of
controlled if the holding
subsidiaries
company can appoint or
remove all or a majority of
the director or
subsidiaries

Control more than half of

the issued share capital of
the subsidiaries (other
than preference share)

Continue
According to s5(1)(b), a corporation is also deemed to be a subsidiary.
If it a subsidiary of a holding company that itself a subsidiary.
Shares in a subsidiary held by a nominee in trust for the holding
company are treated as being held by the holding company. On the
other word, where a company is merely holding the shares in its
capacity as trustee, the shares are treated as being held by a holding
company, (s5(33)).

Example:
X Bhd.
(Holding
Company)

X Bhd control:
The
composition
of the board
of director of
Y Bhd.
More than
50% of
voting power
and shares
in Y bhd.

Y Bhd.
(Holding and
subsidiary
company)

Y Bhd control:
The
composition
of the board
of director of
Z Bhd.
More than
50% of
voting power
and shares
in Z bhd.

Z Bhd.
(Subsidiary
company)

ULTIMATE HOLDING COMPANY

S5A states that a corporation shall be deemed to be
ultimate holding company of another corporation if:
a) That other corporation is a subsidiary of that holding
company
b) The holding company is not itself a subsidiary of another.

In other words, an ultimate holding company is a

corporation which has subsidiaries and is not itself a
subsidiary of some other corporation.

Example:

A Bhd.
B Bhd.

Ultimate
Holding
Company

C Bhd.
D Bhd.

WHOLLY OWNED SUBSIDIARY

S5B provides that a corporation is a wholly owns
subsidiary if none of its member is a person other than:
a)
b)
c)
d)

Its holding company,

A nominee of its holding company,
Another wholly owned subsidiary of the holding company OR
A nominee of such a wholly owned subsidiary

In other words, a wholly owned subsidiary is a subsidiary

in which all the shares are owned by the holding
company, it nominees, its wholly-owned subsidiaries
and the nominees of its wholly-owned subsidiaries.

Example:
Holding
company
A

Wholly
owned
subsidiari
es to
holding
company
A

Wholly
owned
subsidia
ry

Nominees
to wholly
owned
subsidiari
es

Nominees
of the
holding
company
A

RELATED CORPORATION
S6 provides that a corporation is deemed to be related
to each other where a corporation:
a) Is the holding company of another corporation
b) Is a subsidiary of another corporation
c) Is a subsidiary of the holding company of another
corporation

Example:
A Bhd
(Holding
Company)

B Bhd.
(Holding and
Subsidiary
Company)

C Bhd
(Subsidiary
Company)

D Bhd
(Subsidiary
Company)