02-17-2009, 09:11 PM
The concept of group of enterprises emerged in the early years of twenty century. The same concept was also applied in corporate sector and many companies crated group of companies. A The concept of group of enterprises/companies emerged due to various benefits which a group enjoys being a group of enterprises/companies.
Holding Company
A company that owns enough voting stock in another firm or company to control management and operations of other company or firm by influencing or electing its board of directors it is also called parent company.
Subsidiary Company
A subsidiary, in business matters, is an entity that is controlled by a bigger and more powerful entity. The controlled entity is called a company, corporation, or limited liability company, and the controlling entity is called its parent (or the parent company). The reason for this distinction is that a lone company cannot be a subsidiary of any organization; only an entity representing a legal fiction as a separate entity can be a subsidiary. While individuals have the capacity to act on their own initiative, a business entity can only act through its directors, officers and employees. (Wikipedia Encyclopedia)
Section (3) of Companies Ordinance 1984 defines holding company and subsidiary companies in the following way
91)For purposes of this Ordinance, a company or body corporate shall be deemed to be a
subsidiary of another ifâ
(a) that other company or body corporate directly or indirectly controls,
beneficially owns or holds more than fifty per cent of its voting securities
or otherwise has power to elect and appoint more than fifty per cent of
its directors; or
(b) the first mentioned company or body corporate is a subsidiary of any
company or body corporate which is that other's subsidiary;
(2) For the purpose of this Ordinance, a company shall be deemed to be
another's holding company if, but only if, that other is its subsidiary.
Account of Group of Companies
According to Companies Ordinance, 1984 a holding company, as defined in section 3, shall make consolidated financial statements.
The provisions of section 237 of the Ordinance lay down following provisions in this regard
There shall be attached to the
financial statements of a holding company having a subsidiary or subsidiaries, at the end of
the financial year at which the holding companyâs financial statements are made out,
consolidated financial statements of the group presented as those of a single enterprise
and such consolidated financial statements shall comply with the disclosure requirement of
the Fourth Schedule and an International Accounting Standards notified under sub-section
(3) of section 234.
A group of enterprises is also liable to make financial statements or accounts of group of whole. According to IFRS -27 a group of enterprises where parent company or any enterprise neither a public company nor a private company that it also liable to prepare consolidated accounts or financial statements.
IFRS lays down the followings in this regard
A parent is required to present consolidated financial statements in which it consolidates its investments in subsidiaries [IAS 27.9] â except in one circumstance A parent is not required to (but may) present consolidated financial statements if and only if all of the following four conditions are met [IAS 27.10]
Holding Company
A company that owns enough voting stock in another firm or company to control management and operations of other company or firm by influencing or electing its board of directors it is also called parent company.
Subsidiary Company
A subsidiary, in business matters, is an entity that is controlled by a bigger and more powerful entity. The controlled entity is called a company, corporation, or limited liability company, and the controlling entity is called its parent (or the parent company). The reason for this distinction is that a lone company cannot be a subsidiary of any organization; only an entity representing a legal fiction as a separate entity can be a subsidiary. While individuals have the capacity to act on their own initiative, a business entity can only act through its directors, officers and employees. (Wikipedia Encyclopedia)
Section (3) of Companies Ordinance 1984 defines holding company and subsidiary companies in the following way
91)For purposes of this Ordinance, a company or body corporate shall be deemed to be a
subsidiary of another ifâ
(a) that other company or body corporate directly or indirectly controls,
beneficially owns or holds more than fifty per cent of its voting securities
or otherwise has power to elect and appoint more than fifty per cent of
its directors; or
(b) the first mentioned company or body corporate is a subsidiary of any
company or body corporate which is that other's subsidiary;
(2) For the purpose of this Ordinance, a company shall be deemed to be
another's holding company if, but only if, that other is its subsidiary.
Account of Group of Companies
According to Companies Ordinance, 1984 a holding company, as defined in section 3, shall make consolidated financial statements.
The provisions of section 237 of the Ordinance lay down following provisions in this regard
There shall be attached to the
financial statements of a holding company having a subsidiary or subsidiaries, at the end of
the financial year at which the holding companyâs financial statements are made out,
consolidated financial statements of the group presented as those of a single enterprise
and such consolidated financial statements shall comply with the disclosure requirement of
the Fourth Schedule and an International Accounting Standards notified under sub-section
(3) of section 234.
A group of enterprises is also liable to make financial statements or accounts of group of whole. According to IFRS -27 a group of enterprises where parent company or any enterprise neither a public company nor a private company that it also liable to prepare consolidated accounts or financial statements.
IFRS lays down the followings in this regard
A parent is required to present consolidated financial statements in which it consolidates its investments in subsidiaries [IAS 27.9] â except in one circumstance A parent is not required to (but may) present consolidated financial statements if and only if all of the following four conditions are met [IAS 27.10]
