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Subsidiary Company in India

Subsidiary Company in India

A subsidiary company is basically a company that's controlled by another company, known as the holding company. This control usually happens when the holding company owns more than 50% of the subsidiary's shares.

In the case of an Indian subsidiary company with a foreign parent company, that foreign entity becomes the holding company, having the majority ownership in the Indian subsidiary. a subsidiary company can be established in the form of a public or a private company and govern by the company laws prevailing in India.

For a private company:

  • No minimum capital required.
  • At least 2 directors, with one being a resident of India.
  • A minimum of 2 shareholders.

For a public company:

  • Minimum 3 directors.
  • At least 7 shareholders.

Benefit of Registering an Indian subsidiary company is:

  1. Entry into Indian market: It provides a foot in the door of the Indian market, the foreign company who wishes to make entry into Indian market may establish Branch office or subsidiary company in India and can avail full of exciting investment opportunities.
  2. Foreign Direct Investment (FDI): This means foreign companies investing in India, buying shares or owning private companies. But sometimes, this needs approval, especially if it's from a country sharing a border with India.
  3. Diversification: Setting up an Indian subsidiary helps a foreign business spread its wings, offer more goods or services, and help the Indian economy grow.
  4. Separate Legal Identity: The subsidiary company can do things on its own, like signing contracts or going to court, just like a person.
  5. Perpetual Succession: Even if people or managers change, the company keeps going. It's like a superhero with a never-ending story.
  6. Limited Liability: This is like a shield for shareholders and directors. Their personal stuff is safe if the company faces any debts or losses.

Registering involves a bunch of steps, like picking a unique name, getting some IDs and certificates, opening a bank account, and sorting out tax stuff. To keep things legal and running smoothly, Indian subsidiary companies must follow the rules mentioned in the Companies Act, 2013, deal with foreign exchange laws, income-tax laws, Goods & Service Tax and meet stock exchange obligations if they're listed.

Foreign Direct Investment (FDI) restrictions:

When it comes to foreign investment in India, most industries allow full foreign ownership (100% FDI). However, in a few sectors, the Central Government's approval is needed before foreign companies or individuals can invest. These sectors include:

  • Private security agencies
  • Civil aviation
  • Mining
  • Print media and broadcasting
  • Satellite establishment and operation
  • Pharmaceuticals
  • Trading of food products

Foreign nationals or entities can set up an Indian subsidiary company that they wholly own (100% ownership). But there are some requirements for public and private companies:


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