Introduction
Are you planning to expand your business into India or set up a local presence? A subsidiary company registration is one of the most popular ways for both Indian and foreign firms to establish a presence. This structure not only allows for operational independence but also ensures limited liability for its parent company.
In this article, we’ll break down the meaning, benefits, registration process, documents required, and compliance aspects of subsidiary company registration in India.
What is a Subsidiary Company?
A subsidiary company is a company controlled by another company, known as the parent company or holding company. In India, a company is considered a subsidiary if the parent:
- Controls more than 50% of its share capital, or
- Exercises control over the composition of its Board of Directors.
Key Features
- Separate legal identity
- Limited liability for parent company
- Ability to enter contracts and own property independently
- Must follow Indian laws and compliances
Types of Subsidiary Companies
Wholly Owned Subsidiary (WOS)
A company where the parent company holds 100% of the shares. Commonly used by foreign companies to operate independently in India.
Partially Owned Subsidiary
Here, the parent company holds more than 50% but less than 100% of the shares, while the other investors have the remaining shares.
Benefits of Registering a Subsidiary Company
- Expansion Opportunities – Enter new markets with a legal identity.
- Limited Liability – The parent company’s liability is restricted to its shareholding.
- Tax Advantages – Possible benefits under double taxation treaties.
- Global Reach – Helps establish international credibility and presence.
Eligibility Criteria for Subsidiary Company Registration
- Parent Company Requirements – Must hold more than 50% shares.
- Directors – A minimum of 2 directors (at least one of whom must be a resident of India).
- Shareholders – A minimum of 2 shareholders is required.
- Capital – No minimum capital requirement under the Companies Act, 2013.
Challenges Faced During Subsidiary Company Registration
- Legal Hurdles – Navigating Companies Act, FEMA, and RBI regulations.
- Documentation Issues – Apostille, Notarization, and Translation of Foreign Documents.
- Operational Differences – Cultural, managerial, and business practice variations between countries.
Subsidiary vs Branch Office vs Liaison Office
- Subsidiary – Independent legal entity, complete operational control.
- Branch Office – Limited scope; can only carry out permitted activities.
- Liaison Office – Serves as a communication channel, with no revenue-generating activities.
Clearly, a subsidiary provides greater flexibility and independence compared to other structures.
Why Foreign Companies Prefer Subsidiaries in India
India’s fast-growing economy, skilled workforce, and investor-friendly policies make it a hotspot for global businesses. A subsidiary offers:
- 100% ownership (in most sectors)
- Full profit repatriation options
- Strong legal protection under Indian corporate law
Cost and Timeline for Subsidiary Registration in India
- Timeline: The process typically takes 3–6 weeks, depending on the documentation and approvals required.
- Cost: Professional fees, government fees, and notarization charges may bring the total to ₹80,000 – ₹1,50,000 (for foreign-owned subsidiaries).
Conclusion
A subsidiary company registration in India is one of the most innovative ways for businesses—both domestic and international—to expand their operations. It offers legal independence, tax benefits, and operational flexibility, making it an attractive choice for global corporations.
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