1.

With respect to the first option provided by you, the option involves the transfer of
one share from D Limited to B Limited and an additional issue of one share to C
Limited. The above transfer and additional issue of one share is undoubtedly
permissible under the Companies Act, 1956 and 2013.
2. With respect to the second option provided by you, the option involves making B
Limited and C Limited the joint holders of 1 share that is currently owned by D
Limited. Though the Companies Act, 1956 does not define a joint member/joint
holder of shares, joint members have been understood to mean: “If more than one
person jointly apply for and are allotted share in a company each one becomes a
member.” This was held in Narandas Munmohandas Ramji v. Indian Manufacturing
Co. Ltd., (AIR 1953 Bom 433). Joint holders have the following position with respect
to the company:
(i) Requisitioning meeting [S. 169 of Companies Act, 1956] For the purpose of
calculating the number of members required for signing a requisition or notice
to call an extraordinary general meeting under Section 169, the signature of
any of the joint holders will be sufficient and be treated as good as the
signature of all of them.
(ii) Splitting up of joint holdings: Unless a company has adopted an article on the
lines of Regulation 7(3) of Table A of Schedule I, joint shareholders will be
entitled to have their holding of shares split into such number of smaller
holdings as there are number of joint holders and have the names of all of
them registered in such order as will entitle all of them to receive notice of
general meetings of the company and exercise voting right. The company
cannot do so by itself or on the application of any one of the join-holders. It
would require the consent of all joint-holders under a partition. This was held
in Rajiv Das (Dr.) v. United Press Ltd., (2001) 44 CLA 268.
(iii) Service of notices etc. [S 53 of Companies Act, 1956 – corresponds to part of
Section 20 of the Companies Act 2013]: In case of joint shareholders, notices
and other documents required to be served by a company will be deemed to be
properly served if the service is effected on the first named of the joint holders
as entered in the register of members [Section 53(4)]. But this does not prevent
the company from issuing notice or other documents to other joint holders also
at its discretion, if the circumstances of any case requires the same.
(iv) Payment of dividends [S. 205 of Companies Act, 1956]: As regards the
payment of dividend, section 205(5)(b) enables the company to make the
payment to the first named of joint shareholders on the register unless
instruction in writing signed by all the joint holders has been given to the
company for making the payment to any other person. In this connection
Regulation 92 of Table A of Schedule I may also be noted.
(v) Attendance and voting: As regards the rights of joint holders to attend and
vote at general meetings, it would seem that, in the absence of any provision in
the Act relating thereto, a company may make its own provision in its articles
of association provided that such provision is not restrictive of any rights
given to shareholders under the Act or otherwise repugnant to any provision in
the Act. In absence of any such provision in the articles joint shareholders may
properly claim the following rights:
(a) Notice of meetings [Table A, Art 57]:Although notices of general
meetings and other documents are required to be served only on the senior
or first named of the joint holders, the joint holders are individually
entitled to be present and take part in the debate at such meetings and vote
on resolutions decided on a show of hands (except that where Regulation
57 of Table A of Schedule I or an or an Article similar thereto has been
adopted by the company, the voting right is not exercisable otherwise than
in accordance therewith); but on a poll the voting rights can be exercised
only by all of them acting together.
(b) Proxy: Proxy can be appointed only by all of the joint holders acting
jointly but this is subject to Regulation 57, Table A which says that in the
case of joint holders the vote of the senior joint holder whether in person
or by proxy shall be accepted to the exclusion of the votes of other joint
holders. For this purpose seniority shall be determined by the order in
which the names stand in the register of members. This shows that the
senior joint holder can appoint a proxy all by himself.
(c) Voting and quorum: Even if the articles do not make any specific
provisions, any joint holder present at a meeting will be entitled to exercise
voting power and will be counted for quorum. But only one of the several
joint holders will be entitled to exercise voting power. For the purposes of
 the quorum, joint shareholders will be collectively regarded as one
shareholder.
(vi) Share qualification [S. 270 of Companies Act, 1956]: Where the Articles of a
company require any specified share qualification for appointment to the
office of director, shares held jointly with others will be sufficient
qualification unless the Articles require that the shares should be held
exclusively in the director’s own sole name.
(vii) Transfer and transmission [Ss. 108, 109 of Companies Act 1956]: In the case
of transfer of shares held by joint holders, the transfer will be effective only if
it is made by all the joint holders. As regards the transmission of shares by
operation of law, Section 45 of the Contract act and the right devolves upon
the representatives of the deceased person jointly with the survivor or
survivors.

3. The above rights thus suggest that the rights that joint shareholders have may be
regulated by the Articles of Association in order to ensure that the rights possessed by
both joint holders are equal so as to not let either have a greater right than the other.
Thus, by being joint holders, B Limited and C Limited can have an equal
shareholding with equal rights thereby not creating a subsidiary. The Articles of
Association may specifically confer upon either of the joint holders specific rights. In
absence of the same, the position outlined from the Act as above will stand. It appears
that both options provided by you are legally permissible while the 2nd option
provided by you is more suitable as it is less tedious and more convenient.