Subsidiary company is any company whose interests
are held and controlled or held by another company. Paid up equity share
capital and preference share capital of the subsidiary company can be
used to determine the holding company, subsidiary company relationship
between two companies.
What is a Subsidiary Company?
There’s often a lot of confusion regarding the position of the
subsidiary company and what it does. A subsidiary company is a company
that is either owned or owned in part by another company. The company
that owns the subsidiary is known as a parent company or a holding
company. It should be noted that a holding company does slightly differ
from a parent company, though.
What is WOS (Wholly Owned Subsidiary)
When one company is 100% owned by another company, it is called Wholly Owned Subsidiary of the company who had made 100% investment in it.
How To Set Up a Subsidiary
To setup one of these companies, you only need a sole director. The
requirement for a company secretary was waived some years ago. The only
restriction is that the sole director cannot then act as the company
secretary. When you register as a sole director, you will enter both
your residential address and a service address. Only the service address
will appear in the public records.
The key here is that in the various documentation you submit
regarding shareholders you will have both an individual director and
another company as a shareholder. You are prohibited from having an
entire company owned by another company.
Once you submit the documents, you will have a decision within 24 hours from Companies House.
Conclusion
Opening up a subsidiary isn’t a decision that you should take
lightly. It isn’t always necessary and it may be better to simply open a
different company from scratch. You have to make this decision by
yourself. And it may be better to employ a professional agent to help
with the opening of your subsidiary.
Know more about how to register company in India
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