A subsidiary company in India is a company that is controlled or owned by another company, referred to as the parent company or holding company. The subsidiary operates as a separate legal entity but is under the control or ownership of the parent company. Establishing a subsidiary in India involves complying with legal and regulatory requirements. Here are key points to consider:

Key Features of a Subsidiary Company in India:

1. Separate Legal Entity:

   • A subsidiary in India is a distinct legal entity from its parent company. It has its own rights, liabilities, and obligations.

2. Ownership and Control:

   • The parent company typically holds a majority of shares in the subsidiary, giving it control over the subsidiary’s management and decision-making processes.

3. Limited Liability:

   • The liability of the shareholders of the subsidiary is usually limited to the extent of their investment in the company. This characteristic provides a level of protection to the parent company.

4. Registration and Incorporation:

   • The subsidiary must be registered and incorporated in accordance with the laws and regulations of India. This involves filing necessary documents with the Registrar of Companies (RoC) in the relevant jurisdiction.

5. Compliance with Companies Act:

   • The subsidiary must comply with the provisions of the Companies Act, 2013, which governs the registration, management, and operation of companies in India.

6. Board of Directors:

   • The subsidiary must have its own board of directors responsible for the governance and management of the company. The parent company may appoint directors to the subsidiary’s board.

7. Financial Reporting:

   • The subsidiary is required to maintain its own financial records and prepare financial statements. Annual audits are conducted, and financial reports are filed with the RoC.

Steps to Establish a Subsidiary Company in India:

1. Name Approval:

   • Obtain approval for the proposed name of the subsidiary from the RoC.

2. Memorandum and Articles of Association:

   • Draft the Memorandum and Articles of Association, which outline the company’s objectives, rules, and regulations.

3. Director Identification Number (DIN):

   • Obtain a Director Identification Number for the directors of the subsidiary.

4. Digital Signature Certificate (DSC):

   • Obtain a Digital Signature Certificate for the directors.

5. Filing with Registrar of Companies (RoC):

   • File the necessary documents, including the Memorandum and Articles of Association, with the RoC.

6. Certificate of Incorporation:

   • Upon approval, the RoC issues a Certificate of Incorporation, officially establishing the subsidiary.

7. Tax Registration:

   • Obtain a Permanent Account Number (PAN) and register for Goods and Services Tax (GST) if applicable.

8. Bank Account:

   • Open a bank account for the subsidiary, and complete other post-incorporation compliance.

9. Compliance with Regulations:

   • Ensure ongoing compliance with Indian laws and regulations, including corporate governance, tax filings, and annual reports.

It’s crucial to consult with legal and financial professionals to navigate the regulatory landscape and ensure compliance with Indian laws when establishing a subsidiary in the country.