How many types of Subsidiaries in India?

Answer 1

India recognizes two primary types of subsidiaries:

Wholly Owned Subsidiary

In a wholly-owned subsidiary, the parent company holds complete ownership, owning 100% of the subsidiary’s shares. However, it’s vital to understand that wholly owned subsidiaries can only be formed in sectors that permit 100% Foreign Direct Investment (FDI).

Joint Venture Subsidiary Company:

It is jointly operated by 2 or more companies. For instance, such companies collaborate on various projects & rule the market together. Additionally, the ownership & control of subsidiary companies are shared with the parent companies.

LLP for Subsidiary Compan:

It’s a type Subsidiary Company formed as a Partnership. In addition, this type of Subsidiary provides liability protection to its partners, which doesn’t make them personally liable for debts/obligations of the Subsidiary Company.

Before initiating the establishment of a subsidiary in India, obtaining approval from the Reserve Bank of India is a crucial prerequisite. This regulatory step ensures adherence to the country’s foreign investment regulations and safeguards the interests of all stakeholders involved.