Subsidiary Company
Subsidiary Company in India
A subsidiary company is one that is controlled by another company, known as the parent company or holding company. The holding company typically owns a majority of the subsidiary’s shares, giving it control over operations and decision-making. When the holding company owns 100% of the subsidiary’s shares, it is referred to as a Wholly Owned Subsidiary.
Types of Holdings in a Subsidiary
A subsidiary relationship can be established in various scenarios such as:
Direct Control – Company A holds over 50% of Company B’s shares.
Board Influence – Company A has the authority to appoint or remove a majority of Company B’s directors.
Multiple Layers – If Company A holds over 50% of Company B, and Company B controls Company C, then Company A is the holding company of both B and C.
Interconnected Rights – If Company X can influence the board structure of Company Y, which has similar rights in Company Z, then Company X becomes the parent company of both Y and Z.
Legal Framework
As per Section 2(87) of the Companies Act, 2013, a subsidiary is defined in relation to a holding company in two main ways:
Board Control – When the holding company controls the composition of the subsidiary’s Board of Directors.
Share Capital Control – When the holding company holds more than 50% of the total share capital of the subsidiary, either individually or along with other subsidiaries.
Even if control is exercised indirectly through another subsidiary, the parent company is still considered a holding company.
Required Documents for Registering a Subsidiary Company in India
When applying, you’ll need to prepare and upload various documents:
Company-related Documents
Memorandum of Association (MoA) and Articles of Association (AoA)
Proof of the registered business address (lease agreement or ownership documents)
Recent utility bills
Resolution from the promoter company
Certificate of incorporation for foreign companies (if applicable)
Director and Shareholder Documents
Digital Signature Certificate (DSC) and Director Identification Number (DIN) for all directors and designated shareholders
Proof of identity and address for directors and shareholders
Photographs of directors and shareholders
Declaration of interests from first directors in other entities
What are the Benefits of Subsidiary Company in India?
Reduced Liability
Boost Business Development
Wider Pool of Assets
Increased Business Efficiency
Expansion of Capital
Lowered Tax Rates
Establishing a subsidiary company is a strategic move for businesses looking to expand into new regions and sectors. Subsidiaries act as extensions of the parent company, enabling diversification of operations and entry into different markets.
It’s important to note that a subsidiary is considered an Indian company and must comply with all applicable regulations. For businesses planning to grow through subsidiaries, understanding the legal framework and registration process is crucial for success.
Online Procedure for Subsidiary Company Registration in India
The following is the procedure for Subsidiary Company Registration:
Application Process
To register a subsidiary company, you will need to fill out the SPICe+ form, which simplifies the registration process by combining several services:
Part A: Name Reservation for new companies
Part B: Includes incorporation, application for DIN, PAN, TAN, EPFO, ESIC registration, GSTIN application, and bank account opening.
Required Documents
When applying, you’ll need to prepare and upload all the necessary documents (as listed in the required documents section).
Authentication and Payment
After uploading the necessary documents, the application must be authenticated using a Digital Signature Certificate (DSC).
Once authenticated, you can make the required payment. The Registrar of Companies (RoC) will review the application and, upon approval, issue a Certificate of Incorporation.
Frequently Asked Questions
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Proposed company name
Business entity type (Ltd, LLP, Partnership, etc.)
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Owner or shareholder details (if applicable)
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