Subsidiary is that form of company that is partly owned or wholly controlled by another company that holds more than half of the subsidiary's stock. This subsidiary company can be formed as limited liability company, corporation or company as per the controller and board of directors and share holders decision. The controlling company is popularly called by holding company or parent company to that of subsidiary company. This approach of subsidiary companies is very much familiar among the multinational company stream where they usually owned or control another subsidiary company. This subsidiary company may be small or large to its parent company but the holding company should own more than half of subsidiary stock's. For the purpose of liability, taxation and regulation the subsidiary company is separate to that of parent company. Here the business operations and other corporate activities can be integrated with parent company but not of those legal formalities. For legal wise, subsidiary company needs to act as distinct from that of holding company.
While setting up of subsidiary company, there are several rules and regulations have been established by New Companies Act, 2013 and other concern authority. Well, one needs to follow all the legal requisites in order to run the subsidiary company smoothly while getting apart from any types of legal hurdle.
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