New Section 347D: Special rules for subsidiaries
258.Section 347D specifies special rules which apply to a company incorporated in Great Britain which is a subsidiary of a holding company. (The terms “subsidiary”, “holding company” and “wholly-owned subsidiary” each have the meaning given by section 736 of the Companies Act 1985.) Subsection (2) provides that, when the subsidiary company is not a wholly-owned subsidiary, it may not lawfully make any donation or incur any expenditure which has not been approved in general meeting by both the holding company and the subsidiary company itself.
259.Subsection (3) provides that, when the subsidiary is a wholly owned subsidiary of its holding company, then the subsidiary need not pass its own resolution but the resolution of the holding company will still be required.
260.Subsections (4), (6) and (9) provide that the resolution of the holding company must be in the same terms as those required for the subsidiary itself.
261.Subsection (7) provides that, where donations or expenditure by a number of subsidiaries are required to be approved by the holding company, there must be separate resolutions dealing with each subsidiary. Subsection (8) applies the prohibition on subsequent ratification and approval described in relation to section 347C above to holding company approval resolutions.
