A holding company can be any form of business entity that holds enough shares of another company to control the other company’s management. A holding company does not have any form of active business. However, it owns the assets and interests of other companies. Through this article, we are going to look into the process of how to register a holding company in India.
Advantages of a holding company
Before we unveil how to register this particular form of company, let us discuss the advantages of having such a business entity. These advantages form the majority of reasons as to why holding company is so important:
- It ensures control and unity over a group of companies: A group of company in this particular case are called subsidiary companies. There can be many such companies, and you need a holding company to have better control over them.
- Funding is easy: if a group of the company asks for funding at the same time, it can be quite an issue. However, if their parent company or holding company asks for the same, funding becomes easy. It is because the structure of a holding company allows the subsidiary company to set up a global credit limit.
- Transfer of shares is easy: If there is a holding company to supervise subsidiaries companies, then it is easy to transfer the shares among them.
- There are tax benefits: Holding companies are considered to be worthy of tax benefits. The reason for this is their importance towards the economy o the country.
These are the benefits of starting a holding company. However, you would be surprised to know the process to register a holding company in India.
Holding company Registration process
The process of holding company registration is quite simple: It is a simple private limited company registration process. This process is as follows:
- Apply for DSC and DIN
- Gather the documents required for company registration
- File the RUN application
- Draft the MOA and the AOA of the company.
- Apply for the company registration through an online application.
However, the process of company registration in India shall still involve some specific matters to be attended to. These matters are special mentions in the MOA
- The Specifics of the Memorandum of Association shall include the task of controlling the assets over the subsidiary companies. Therefore, you need to include the following details:
- Name of the subsidiary companies.
- The shareholding pattern of these companies.
- How much share the holding company holds in these companies.
- The specifics of Article of Association: This shall include the rights of the holding company.
This is all that you need to know about the advantages and the process of Holding company registration.