An organization that is under the parent or holding company’s control is referred to as a subsidiary. As the primary shareholder, the Holding Company normally owns the majority of the subsidiary’s shares, providing it considerable control and influence over the subsidiary’s operations.
An organization that is under the parent or holding company’s control is referred to as a subsidiary. As the primary shareholder, the Holding Company normally owns the majority of the subsidiary’s shares, providing it considerable control and influence over the subsidiary’s operations.

A subsidiary is considered to as wholly-owned when a Holding Company owns all of the shares in that subsidiary. A subsidiary may be formed by the establishment of a new business or the purchase of an already-existing one.

In reference to a Holding Company, a subsidiary company is defined as follows under Section 2(87) of the Companies Act, 2013:

• The Holding Company has the authority to determine who makes up the Board of Directors, or
• Either alone or in combination with other subsidiaries, it holds more than half of the entire share capital.

In addition, the law specifies a maximum number of subsidiary layers that a Holding Company may have.

Principal Justifications:

• Even if a firm has influence over another subsidiary of the same Holding firm, it is still regarded as a subsidiary.
• If the Holding Company has the authority to appoint or remove all or a majority of the directors, then control over the Board of Directors is said to exist.
• Any corporate entity is also included in the term “company”.
• A direct or indirect subsidiary of the Holding Company is referred to as a “layer”.

How to Set Up a Subsidiary Business:

The application for the registration of a subsidiary must be submitted via the SPICe+ Form, an integrated form that streamlines the procedure by integrating several services. Two sections make up the SPICe+ Form:

Section A: Naming Reserving New Businesses.
Part B comprises applications for director identification numbers (DINs)

• PANs, and TANs as well as company incorporation applications.
• Application for GSTIN, EPFO, and ESIC registration
• Establishing a Bank Account Professional Tax Registration (Maharashtra only if applicable)

This procedure makes it possible for a subsidiary company to be effectively registered and incorporated under the relevant legal framework.