A foreign subsidiary company is a partially or wholly-owned company which is a part of a larger corporation. The larger corporation must be headquartered in another country. The foreign subsidiary company works according to the laws of the country in which they are located.
Synergies are combining two services together to get a combined or greater effect. Establishing subsidiary companies provide the benefit of synergies where a common financial system used, sharing the cost incurred between the parent company and subsidiary.
- Brand name
The brand name is retained as both the parent company and the subsidiary bear the same name. This leads to better growth opportunities for the business as the identity of the company will be retained.
- Limited Liability
Both companies have limited liability.
- Trade secrets
Along with control over the operations, the company’s trade secrets, expertise will be protected. A wholly subsidised company can be incorporated in India after looking into all the benefits that come with establishing a subsidised company in India.
- The continuous inflow of funds
There is continuous inflow of funds by the parent company. The cost of debt can be saved by subscribing new shares to the subsidiary company.
- Joint venture
Setting up a foreign subsidiary company makes it easier to establish joint ventures with other companies.
- Greater cooperation
The holding and subsidiary companies can use a common financial system, and they can share their administrative and other expenses. This provides them a huge benefit by making things cost effective.
- Global Strategy
It provides protection and security to the company’s trade secrets, expertise and technical knowledge along with the control over the operations.
Note: All documents submitted towards the registration of a foreign subsidiary company must be translated in English
Establishing a foreign subsidiary company in India has a lot of benefits of its own. These companies are regulated by the Companies Act, 2013. All types of businesses are permitted to set up their business in India.
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