In the case of an associate company, the parent company owns less than controlling share. Companies use subsidiary structures to when they do business internationally, where they incorporate a separate subsidiary company in each country. Right of holding company to inspect books of account of subsidiary Inspection of books of account of any subsidiary company shall be done by person authorized by Board of Directors.
Section and proviso to Section 2 87 of the Companies Act restricts the number of layers that holding companies can have. The ownership of the subsidiary is spelled out in the registration.
The owning company is called a parent company or sometimes a holding company. You will need both tax and accounting professionals to help you set up a subsidiary and navigate the regulations.
A company that owns real estate and has several properties may form an overall holding company, with each property as a subsidiary.
Following are the implication:- Many relaxations to private Company are not available to subsidiary of public Company. While the parent company does hold influence over the subsidiary company, the subsidiary is a legally independent entity. Disclosure in balance Sheet of Holding Company Balance sheet of holding company shall specifically disclose investments in the subsidiaries.
Disadvantages of a Subsidiary LegalZoom notes that if the parent company is sued, the liability can move down to the subsidiaries.