Subsidiary Company
A subsidiary
company is a company that is completely or partly owned by
another corporation that
owns more
than half of the
subsidiary’s stock. The another corporation is often called the Parent or
Holding company of subsidiary company.
As per the
sec 4(3) of companies act, 1956 a company shall be deemed to be a subsidiary of
another if:
1. that other controls the
composition of its board of directors
2. that other holds more than half of the nominal value of equity share capital
3. the
first mentioned company is a subsidiary of any company which is that other’s company.
To simplify the point 3 there is an
illustration given below:
Company B is a subsidiary of Company A, and Company C is a
subsidiary of Company B then by virtue of point 3 Company C is a subsidiary of
Company A.
Formation of subsidiary company in India:
Foreign
Companies can form subsidiary company in India and can own 100% share holding in all sector except certain negative sector or industries as
prescribed in FDI. These subsidiary company are known as wholly owned subsidiary company. Wholly owned subsidiary company in India can be formed as either as
public limited or private limited.
Steps to be followed for forming a subsidiary company :
1. Apply for DIN
All the directors interested in forming the wholly owned subsidiary
company in India need to file an application in form DIN-1 to get their director identification
number(DIN).
2. Apply for digital signature
Digital Signature is an electronic signature used to authenticate the
documents. A properly implemented Digital signature gives the receiver reason
to believe that the message has been sent by the original owner and the owner
cannot deny for the authentication of the signature. Digital signature uses the
encryption technique and a public/private key to verify the authenticity of
transaction.
3. Apply for the company name
You need to apply to Ministry of Corporate Affairs(MCA) for the name
approval. The application has to be made in Form1A. If your application satisfies all
the condition of companies act then the registrar will approve the name within
7 days time. After the name
approval you can apply for registration of the company.
4. Incorporate the wholly owned
subsidiary company
With the approval of name you can apply to incorporate the wholly owned
subsidiary company. Following documents are required to be submitted along with
form1:
a) Form
18
b) Form
32
c) MOA
and AOA
Company
India Advisors Private Limited
A-20 Lower Ground Floor
