Understanding Subsidiary Companies in India
Brand Recognition
The subsidiary companies can grow in size. Hence, under the umbrella of a Parent Company, they can establish brand recognition, and increase the value of shares in the market.
Reduction of Risk
The parent and subsidiary companies are legally separated entities. So, the process mitigates the risk of loss in subsidiaries. When a subsidiary faces any loss, they do not directly transfer back to the parent company. In the case of bankruptcy, the parent company may be liable if there is any proof that the subsidiary and the parent company are legally the same.
Tax Benefits
Subsidiaries can receive tax advantages, especially if a subsidiary originated in a different state or country.
Easy Merging and Acquisitions
Company merging and acquisitions are easy with subsidiaries. Through merger and acquisition facilities, the company can save taxes because the profit of the subsidiary gets divided from the parent company.
Separate Legal Identity
According to the Companies Act 2013, a company can get a separate and distinct legal entity. Hence, it can stay separated from its shareholders with a separate legal identity. It also empowers a subsidiary to initiate legal actions in response to any allegations before the judicial system by its name without the direct involvement of its directors or members.
Foreign Entry to the Indian Market
Foreign companies can establish wholly owned subsidiaries by Foreign Direct Investment (FDI) in India, through the provisions of RBI (2020), and Foreign Exchange Management Act 1999.
Perpetual Succession
The company’s existence remains intact, regardless of management changes, membership transfers, or insolvency. The company continues to operate seamlessly, with complete stability and spontaneous persistence.
Limited Liability
Subsidiaries form with a limited liability. This principle protects the personal assets of the directors and shareholders of the company. If the company faces severe losses, it does not affect the personal property of shareholders and directors.
At least 2 shareholders are essential to building an Indian subsidiary. They can be individuals or foreign entities.
Directors:
At least 2 directors are mandatory; one must be an Indian resident residing permanently in India.
Time required for registration: The registration process for a subsidiary company in India takes from 12 to 15 days from the date of document submission.
- Certificate of incorporation
- Registered Name and address of the company
- Board Resolution
- Passport copy
- Address proof
- A scanned copy of a photograph or digital photocopy
- Mobile Number
- Email ID of each of them
- Pan and Aadhar
- Mobile Bill, Credit Card Bill, or Bank Statement
- Digital Photocopy
- Mobile Number
- Email ID
- Certificate of Incorporation
- MOA and AOA
- Digital Signature
- Fees paid Challans
- Fill the Form & Make the Payment
- Expert Will Call You & Receive All the Necessary Documents.
- Obtain DIN and DSC
- Filing MoA and AoA on the MCA portal
- Your Documents will be Filed & Submitted to the ROC
- Congratulations! You’ve registered your company. Certificates Will Be Provided
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