Indian Subsidiary Company is a form of company. It is formed when 50% of equity shares or more of a company are owned by a foreign company. A subsidiary company is also known as a subsidiary or sister company. The company owning the subsidiary is known as the parent company. When a parent company owns 100% equity shares of the subsidiary, it becomes a wholly-owned subsidiary company. It enables Foreign Direct Investment (FDI) in the country.
Features of subsidiary company.
- Separate legal entity
- Must function according to the rules of the host company
- Generates FDI
- Best suited for incorporating in a different country
Advantages of a subsidiary company.
- The parent company provides for buying power, funds, technical expertise and other features which the subsidiary could not afford otherwise.
- Provide financial means to start a new project.
- Parent company controls the subsidiary.
- One company’s loss is not transferred to another company.
- Diversification of business.
- 100% foreign direct investment.
- Easily transferable.
- Limited liability.
- Uninterrupted existence.
Requirements to start a subsidiary company.
- Minimum 2 directors.
- Minimum 2 shareholders.
- Minimum capital of 1 lakh.
Documents required for incorporation of subsidiary company.
- Office address proof.
- Pan card (Indian national).
- Address proof (Indian and foreign national).
- Photo identity proof (Indian and foreign national).
- Passport (foreign national).
Process to incorporate a subsidiary company.
- Obtain DIN, DSC.
- Apply for name of company in form INC-1.
- After obtaining name approval, an applicant is required to file form INC-7 (Application for Incorporation of Company (Other than OPC).
- Form DIR-12 (Particulars of appointment of directors and the key managerial personnel and the changes among them).
- Form INC-22 (Notice of situation or change of address of the registered office of the company) along with Memorandum and Articles of Association of the Company.
- Pay fees and stamp duty.
- After payment, verification of documents is done.
- After verification, certificate of incorporation is issued.
Time for registration.
Time taken for incorporation is 40-60 working days.
Cost of registration.
Cost for incorporation differs from vendor to vendor, but generally ranges between RS. 45000-55000.