Section 22. Membership of holding company

1. A corporation shall not be a member of a company which is its holding company and any allotment or transfer of shares in a holding company to its subsidiary shall be void.

2. Subsection (1) shall not apply where the subsidiary concerned is a personal representative or a trustee, unless the holding company or its subsidiary is beneficially interested under the trust.

3. For the purposes of subsection (2) and in determining if a holding company or a subsidiary is interested, any interest held by way of security for the purposes of a transaction entered into by the holding company or a subsidiary in the ordinary course of a business which includes the lending of money shall be disregarded.

4. This section shall not prevent a subsidiary from continuing to be a member if, at the time it becomes a subsidiary, it already holds shares in the holding company.

5. For the purposes of subsection (4), a subsidiary—

   • shall have no right to vote at meetings of the holding company or any class of members of the holding company; and

   • shall, in the case of a subsidiary referred to in subsection (4), dispose of all of its shares in the holding company within twelve months after becoming a subsidiary or such longer period as the Registrar may allow.

6. Subject to subsection (2), subsections (1), (4) and (5) shall apply in relation to a nominee for a corporation which is a subsidiary as if references in those subsections to such a corporation include references to a nominee for it.

7. This section shall not operate to prevent the allotment of shares in a holding company to a subsidiary which already lawfully holds shares in the holding company if—

   • the allotment is made by way of capitalisation of reserves of the holding company; and

   • the allotment is made to all members of the holding company on a basis which is in direct proportion to the number of shares held by each member in the holding company.

8. Where, due to the operation of this section, a subsidiary is prevented from subscribing shares in the holding company which the subsidiary is entitled to subscribe, the holding company may, on behalf of the subsidiary, sell those shares.

9. In relation to a holding company that is either a company limited by guarantee or an unlimited company, the reference in this section to shares, whether or not it has a share capital, shall be construed as including a reference to the interest of its members in whatever form.