Indian Subsidiary Limited Company Registration
A subsidiary company is a company whose control lies with another company. The company that holds the control is termed as a Parent Company or Holding Company. The Holding company owns a majority of the shares of the subsidiary company, and hence it can exercise control as the major shareholder.
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Table of Content
- Indian Subsidiary Company Registration - Overview
- Types of Subsidiaries in India
Indian Subsidiary Company Registration
A subsidiary company is a company whose control lies with another company. The company that holds the control is termed as a Parent Company or Holding Company. The Holding company owns a majority of the shares of the subsidiary company, and hence it can exercise control as the major shareholder.
The holding company holds an interest in the subsidiary company. The company in which the holding company holds 100% share capital is termed as a wholly-owned subsidiary. The subsidiary company can be either established or acquired by the holding company.
Setting up a subsidiary in India can be a transformative step for expanding your business operations and accessing one of the world’s largest and most dynamic markets.
Our team of experts is here to guide you through the complexities of Indian subsidiary registration, from understanding the legal requirements and navigating regulatory approvals to assisting with compliance and documentation on setting up an Indian subsidiary of foreign company.
Types of Subsidiaries in India
In India, there are two primary categories of subsidiaries:
1. Wholly-Owned Subsidiary
In a wholly-owned subsidiary, the parent company possesses 100% ownership of the subsidiary’s shares. However, it’s important to note that wholly-owned subsidiaries can only be established in sectors that permit 100% Foreign Direct Investment (FDI).
2. Subsidiary Company
In this category of subsidiary, the parent company owns 50% of the subsidiary’s shares.
Before proceeding with establishing a foreign subsidiary company in india, obtaining approval from the Reserve Bank of India is a crucial prerequisite. This regulatory step ensures compliance with the country’s foreign investment regulations and safeguards the interests of all stakeholders involved.
Advantages of Indian Subsidiary Company Registration
Entry into the Indian Market
India’s competitive environment offers a plethora of investment opportunities that attract foreign entrepreneurs to establish their subsidiary companies in the country.
Foreign Direct Investment (FDI) in India
FDI involves investments by foreign companies in Indian private companies through share subscriptions or acquisitions. In 2020, the Indian government introduced a provision requiring prior approval for investments from countries sharing a border with India, making Indian subsidiary registration an attractive option for foreign investors.
Perpetual Succession
The concept of perpetual succession ensures that a company’s existence remains intact regardless of events like changes in management, transfers of membership, or insolvency. The company continues to operate seamlessly, providing stability and continuity.
Related Business Registrations
In addition to registration or incorporation, a business may require other registrations depending on the business activity undertaken. Talk to an Advisor to find out registrations your business may require post registration.
