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.
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 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
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