law: Companies Act, 1956
  Sec 42    -    
  
  Membership of holding company.
  (1) Except in the cases mentioned in this
  
  section, a body corporate cannot be a member of a company which is its holding
  
  company and any allotment or transfer of shares in a company to its subsidiary
  
  shall be void.
  (2) Nothing in this section shall apply :
  (a) where the subsidiary is concerned as the
  
  legal representative of a deceased member of the holding company; or
  (b) where the subsidiary is concerned as
  
  trustee, unless the holding company or a subsidiary thereof is beneficially
  
  interested under the trust and is not so interested only by way of security for
  
  the purposes of a transaction entered into by it in the ordinary course of a
  
  business which includes the lending of money.
  (3) This section shall not prevent a
  
  subsidiary from continuing to be a member of its holding company if it was a
  
  member thereof either at the commencement of this Act or before becoming a
  
  subsidiary of the holding company, but except in the cases referred to in sub-section
  
  (2), the subsidiary shall have no right to vote at meetings of the holding
  
  company or of any class of members thereof.
  (4) Subject to sub-section (2), sub-sections
  
  (1) and (3) shall apply in relation to a nominee for a body corporate, which is
  
  a subsidiary, as if references in the said sub-sections (1) and (3) to such a
  
  body corporate included references to a nominee for it.
  (5) In relation to a holding company which is
  
  either a company limited by guarantee or an unlimited company, the reference in
  
  this section to shares shall, whether or not the company has a share capital,
  
  be construed as including a reference to the interest of its members as such,
  
  whatever the form of that interest.