All You Need To Know On How to Incorporate a Subsidiary Company

A company may sometimes create a new subsidiary company to minimize its risk while starting a new business or expanding into other regions. Such a subsidiary company’s control lies with the parent or holding company. The parent company owns most of the shares of the subsidiary, and has, therefore, control as the major shareholder. If you are planning to form a subsidiary company, you need to know everything about how to incorporate a subsidiary company so that your business runs smoothly. As it is complicated, you may choose to use a reliable company incorporation service like Morrison Management. 

As per law, a subsidiary company requires to meet all compliances generally applicable to all Indian companies. There should be a minimum of two directors and two shareholders in the firm to incorporate an Indian subsidiary company.

The step by step procedure to incorporate a subsidiary company

You need to take the following steps and this is a perfect guide on how to incorporate a subsidiary company:

1.       At least two directors should apply for Digital Signature Certificate (DSC), and all of them need to apply for DIN (Director’s Identification Number)
2.       The next step is to apply for the company name using Form INC-1. The name should be unique and not used by another company
3.       Once the RoC (Registrar of Companies) of the Ministry of Corporate Affairs (MCA) approves the name, the applicant must file:

•       Form INC-7 for application of incorporation of a company that is not a one-person company
•       Form DIR-12, which contains details of directors and other key management executives
•       Form INC-22 that is for Memorandum of Association (MoA), along with a situation clause notice
•       After filing these forms, pay the RoC’s fees online, together with prescribed stamp duty. The stamp duty is based on the authorized capital of the subsidiary company
•       Then, the RoC verifies the uploaded documents. The RoC may suggest changes or ask for further documents if required
•       After making the changes, if the RoC approves the application after verifying all documents, it sends the Certificate of Incorporation to the applicant via email 

The documents required for incorporation of a subsidiary company

Related to the company:

•       Memorandum and Articles of Association
•       Address proof of registered business place. If it is a rented property, then a rent agreement, and if own property, then ownership agreements are required
•       Duplicate of utility bills like electricity or phone bills
•       The promoter company’s resolution copy
•       If it is a foreign company, then a copy of the incorporation certificate
•       The firm’s capital layout

Related to the directors and shareholders:

•       DIN and DSC for the directors and designated shareholders
•       Identity proof of directors and shareholders
•       Address proof of directors and shareholders
•       Copies of the latest photos of directors and shareholders
•       Interests, if any, of the first directors in other businesses
•       The directors’ and shareholders’ declarations, if any

If you are looking to grow your business in other regions or venture into other sectors, it will be beneficial to form a subsidiary company. 3E Accounting India is a leading firm providing incorporation services in India for all types of firms, including subsidiary companies. We are the most-experienced business service provider in India helping companies with incorporation procedures, accounting, taxation, and other related services.