law: Companies Act, 1956
  Sec 4    -     Meaning
  
  of " holding company " and " subsidiary". 
  (1) For the purposes of this Act, a company
  
  shall, subject to the provisions of sub-section (3), be deemed to be a
  
  subsidiary of another if, but only if,
  (a) that other controls the composition of its
  
  Board of directors ; or
  (b) that other -
  (i) where the first-mentioned company is an
  
  existing company in respect of which the holders of preference shares issued
  
  before the commencement of this Act have the same voting rights in all respects
  
  as the holders of equity shares, exercises or controls more than half of the
  
  total voting power of such company ;
  (ii) where the first-mentioned company is any
  
  other company, holds more than half in nominal value of its equity share
  
  capital ; or
  (c) the first-mentioned company is a
  
  subsidiary of any company which is that other's subsidiary.
  Illustration
  Company B is a subsidiary of company A, and
  
  company C is a subsidiary of company B. Company C is a subsidiary of company A,
  
  by virtue of clause (c) above. If company D is a subsidiary of company C,
  
  company D will be a subsidiary of company B and consequently also of company A,
  
  by virtue of clause (c) above, and so on.
  (2) For the purposes of sub-section (1), the
  
  composition of a company's Board of directors shall be deemed to be controlled
  
  by another company if, but only if, that other company by the exercise of some
  
  power exercisable by it at its discretion without the consent or concurrence of
  
  any other person, can appoint or remove the holders of all or a majority of the
  
  directorships ; but for the purposes of this provision that other company shall
  
  be deemed to have power to appoint to a directorship with respect to which any
  
  of the following conditions is satisfied, that is to say -
  (a) that a person cannot be appointed thereto
  
  without the exercise in his favor by that other company of such a power as
  
  aforesaid ;
  (b) that a person's appointment thereto
  
  follows necessarily from his appointment as director, or manager of, or to any
  
  other office or employment in, that other company ; or
  (c) that the directorship is held by an
  
  individual nominated by that other company or a subsidiary thereof.
  (3) In determining whether one company is a
  
  subsidiary of another
  (a) any shares held or power exercisable by
  
  that other company in a fiduciary capacity shall be treated as not held or
  
  exercisable by it ;
  (b) subject to the provisions of clauses (c)
  
  and (d), any shares held or power exercisable
  (i) by any person as a nominee for that other
  
  company (except where that other is concerned only in a fiduciary capacity) ;
  
  or
  (ii) by, or by a nominee for, a subsidiary of
  
  that other company, not being a subsidiary which is concerned only in a
  
  fiduciary capacity ;
  shall be treated as held or exercisable by
  
  that other company ;
  (c) any shares held or power exercisable by
  
  any person by virtue of the provisions of any debentures of the first-mentioned
  
  company or of a trust deed for securing any issue of such debentures shall be
  
  disregarded ;
  (d) any shares held or power exercisable by,
  
  or by a nominee for, that other or its subsidiary not being held or exercisable
  
  as mentioned in clause (c) shall be treated as not held or exercisable by that
  
  other, if the ordinary business of that other or its subsidiary, as the case
  
  may be, includes the lending of money and the shares are held or the power is
  
  exercisable as aforesaid by way of security only for the purposes of a
  
  transaction entered into in the ordinary course of that business.
  (4) For the purposes of this Act, a company
  
  shall be deemed to be the holding company of another if, but only if, that
  
  other is its subsidiary.
  (5) In this section, the expression "
  
  company " includes any body corporate, and the expression " equity
  
  share capital " has the same meaning as in sub-section (2) of section 85.
  (6) In the case of a body corporate which is
  
  incorporated in a country outside India, a subsidiary or holding company of the
  
  body corporate under the law of such country shall be deemed to be a subsidiary
  
  or holding company of the body corporate within the meaning and for the
  
  purposes of this Act also, whether the requirements of this section are
  
  fulfilled or not.
  (7) A private company, being a subsidiary of a
  
  body corporate incorporated outside India, which, if incorporated in India,
  
  would be a public company within the meaning of this Act, shall be deemed for
  
  the purposes of this Act to be a subsidiary of a public company if the entire
  
  share capital in that private company is not held by that body corporate
  
  whether alone or together with one or more other bodies corporate incorporated
  
  outside India.