Like a standard company, the Subsidiary company formation process is the same. Before explaining the formation process of a subsidiary company it is vital to know about the subsidiary company.
What is a Subsidiary Company?
It has often been found that there is huge confusion regarding the position of the subsidiary company and its functions. A subsidiary company is referred to as a company that is either owned fully or owned partly by another company. The firm that owns the subsidiary company is identified as the parent company or a holding company but there is a slight difference between a parent company and a holding company.
How to set up a Subsidiary?
- As it is discussed a subsidiary company can be owned partly or fully by another company, it is not like trading under a different name. The subsidiary is technically a different company so it needs to be incorporated as one.
- While setting up your company with RTRSupports Limited you can choose to have a corporate ownership structure as opposed to a person without any difficulty. You require a minimum of one person to submit the necessary documents and to act as a director for the new company. Besides, you will require a registered office address, which must exist within the country where you are setting up the subsidiary.
- To form one of these companies, you will require a sole director. A company secretary is no more required. The only restriction is that the sole director will be unable to act as a company secretary. While registering as a sole director you will need to fill up your residential address as well as the service address, however, only the service address will appear in the public records.
- You need both an individual director and another company as a shareholder. You are restricted from owning an entire company that is owned by another company. After the documents are submitted, the Companies House will provide a decision to you within 24 hours.
You can make changes in the Subsidiary after setting it up, which is similar to any other private limited company. Moreover, you can sell a part of the company to another company, or the subsidiary can also be transformed into a stable company.
Why should you set up a subsidiary company?
A subsidiary company is required in few cases like:
- You are operating overseas: The companies that are operated from overseas need to set up a subsidiary in the UK. Moreover, there are many taxes and administrative advantages of doing the same.
- Having two different businesses: It often happens that a person has two different arms of the business, which are radically so different that they are required to be separated formally.
- Team differences: You can also create a subsidiary company if you have a team working on various projects at another office. The project might not be relevant to the primary purpose of the business, hence, forming a subsidiary will allow them to be separated formally.