Subsidiaries act like extra arms to the main body and assist the holding company in reaching out to different regions and countries
The company that holds the control is termed as 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 company in which the holding company holds 100% share capital is termed as a wholly-owned subsidiary. As per Law, an Indian subsidiary company is an Indian company and treated as one and is required to meet all the compliances applicable to Indian companies.
SUBSIDIARY COMPANY MEANING
Section 2(87) of the Companies Act, 2013 defines a subsidiary company
a subsidiary company” or “subsidiary”, in relation to any other company (that is to say the holding company), means a company in which the holding company:
- controls the composition of the Board of Directors; or
- exercises or controls more than one-half of the total share capital
Either at its own or together with one or more of its subsidiary companies: Provided that such class or classes of holding companies as may be prescribed shall not have layers of subsidiaries beyond such numbers as may be prescribed.
Minimum requirement
- Minimum Two Directors- At least one should be a resident of India
- Two Shareholder
- The Parent Company must hold 50% of total equity share capital
How to incorporate an Indian Subsidiary?
1. Obtain Digital signature if not
2. Obtain Director Identification Number
We can take it in the form also
3. Name Availability
The company has to choose a unique name and the same to be reserved for a specific time. Reserve a name for the company in the Part A of spice+ form
4. E-filing for incorporation of a Company
Once the name is approved, an online application is required to be filed through SPICE+ PART B along with the requisite documents as under:
- Certificate of Incorporation of the investing company
- Memorandum of Association of the investing company
- Articles of Association of the investing company
- Resolution passed by the investing company
- For Nominees: Residential proof - Bank statement/Mobile Bill/Telephone bill (not older than 2 months and Identity proof- Driving License/Voter ID/Passport
- For registered office: NOC from the owner of the Property and Utility bill(Mobile Bill/Telephone bil/)/Electricity bill in the name of Owner-Not older than 2 months.
- Passport size photo of all directors
- Proof of identity and address for Directors and Shareholders
- Declaration by subscriber
- PAN Card of the Member and Directors
- Email ID and Phone no. of the Directors
- What will your authorized and paid-up capital
- The Name of the Bank in which the account of the company needs to be opened (ICICI /HDFC /Kotak /SBI /BOB /IndusInd /PNB /Axis).
In Part B of the spice+ form we can apply for the following:
- Incorporation
- DIN(Director’s Identification Number) allotment
- Mandatory issue of PAN
- Mandatory issue of TAN
- Mandatory issue of EPFO registration
- Mandatory issue of ESIC registration
- Mandatory Opening of Bank Account for the Company and
- Allotment of GSTIN (if so applied for)
5. CERTIFICATE OF INCORPORATION
Once the company incorporated we will get the certificate of incorporation which contains the Name, CIN, PAN, TAN No. and date of incorporation of the company.
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