(1) Subject to the provisions of this Act, no company shall, either by itself or through its nominees, hold any shares in its holding company and no holding company shall allot or transfer its shares to any of its subsidiary companies and any such allotment or transfer of shares of a company to its subsidiary company shall be void:

Provided that nothing in this section shall apply to a case—

1. where the subsidiary company holds such shares as the legal representative of a deceased member of the holding company; or
2. where the subsidiary company holds such shares as a trustee; or
3. where the subsidiary company is a shareholder even before it became a subsidiary company of the holding company:

   Provided further that the subsidiary company referred to in clause (c) shall have a right to vote at a meeting of the holding company only in respect of the shares held by it as referred to in that clause.

(2) Subject to the provisions of this Act, where a body corporate becomes a subsidiary of a company after the commencement of this Act, the body corporate shall divest its shareholding in the holding company within the prescribed time.

(3) A subsidiary company, which at the commencement of this Act holds shares of its holding company shall not, after such commencement, acquire any further shares of its holding company.