CAF-4 · Chapter 24 · Question 1 of 5
Byzantium Limited (BL) is the holding company of Purple Limited (PL). BL transfers ten shares of PL into the names of two of its directors. What is the most likely legal reason for this transfer?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) To ensure that the number of PL's members shall be in accordance with the statutory limit.
Explanation
A holding company may transfer a nominal number of shares of its wholly-owned subsidiary to its nominees (like directors) to ensure the subsidiary meets the minimum statutory requirement for the number of members.
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