Distribution of work b/w Holding & Subsidiary Company
suppose there are two industrial companies say X and Y. X is a parent (holding) company whereas Y is its subsidiary company. X says that it will provide 30% coking coal and 100% iron ore to Y. Then, what are the compliance required to do so? How will sale and distribution of these things will take place as per the law?
Even though the Parent company and subsidiary company relationship varies as per the terms of the agreement pertaining to each case, in most cases, the parent company is responsible for facilitating the supply of raw materials, whereas distribution and control over sale points is carried out by subsidiary companies. However the same is monitored by the parent company, who acts as the facilitator of all activities carried out by the Company along with its subsidiaries. Furthermore, the sale and distribution of these raw materials shall be subject to the contractual relationship shared by the holding company with the subsidiary company.