How To Setup a Subsidiary in India

How To Setup a Subsidiary in India

A Subsidiary Company is also known as a sister company; and the company which practices control over it, is known as the parent company, or holding company. A subsidiary company can be controlled by the parent company partially or completely.

What is WOS (Wholly Owned Subsidiary)

When one company is 100% owned by another company, it is called Wholly Owned Subsidiary of the company who had made 100% investment in it. When the holding company owns 100% of the subsidiary then the subsidiary is known as a wholly-owned subsidiary of the parent company.

For setting up a subsidiary, the parent company must own at least 50% of the subsidiary. Subsidiary company of a foreign parent company is a separate legal entity, and the subsidiary company function under the rules and regulations of the country where it is situated.

A company can be registered as a private limited or public limited company:

  • A private limited company is a type of privately held small business entity. This type of business entity limits owner liability to their shares, limits the number of shareholders to 50, and restricts shareholders from publicly trading shares.
  • A public limited company It is governed under the provisions of the Indian Companies Act, 2013. While there is no limit on the number of members, it is formed by the association of persons voluntarily with a minimum paid-up capital of 5 lakh rupees.

A foreign company’s wholly owned subsidiary company in India, when a foreign company makes 100% FDI (Foreign Direct Investment) in India through an automatic route. This is possible where 100% FDI is permitted, former approval of Government and RBI is not required and FDI is allowed without these permissions.

Documents required for registration of Subsidiary Company

  • 1. Indian National
    • 1. PAN Card
    • 2. Address proof
    • 3. Photo ID Proof
  • 2. Foreign National
    • 1. Passport
    • 2. Photo ID Proof (Document must be certified by Indian Consulate)
    • 3. Address Proof (Document must be certified by the Indian Consulate)
  • 3. Minimum requirement to incorporate a Pvt. Ltd. Company
    • 1. Two directors
    • 2. Two shareholders

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