India is one of the fastest-growing markets in the world and is attracting the attention of investors who know how to spot business opportunities and decide to open a holding structure. Registering a holding company in India has numerous advantages for companies that opt for this type of business structure, both in terms of management and taxation. If we had to define the concept of a holding company using a common language, we would say that it consists of a company whose main objective is centralization.
Simply put, a holding company is a structure in which a hierarchy is established between the parent company and the subsidiaries that are dependent on it. It is one of the most versatile structures for investors to optimize their assets, and our lawyers in India can help you to have one.
Our team offers many other services, including those related to relocation, provided by our immigration lawyers in India.
Our team is also able to answer questions about citizenship in India, and the routes through which this can be acquired. For most foreign nationals, this status will be gained after a prolonged lawful stay of twelve years, however, those who are married to an Indian citizen and have been living in the country for long enough can apply faster. Our team can give you details.
What is the purpose of opening a holding company in India?
The main purpose of opening a holding company in India is to own and control the remaining shares of the subsidiary companies. In the end, the parent company then manages the capital of the remaining subsidiary companies.
For this reason, the holding company continues to be the best business structure for managing large corporate groups or groups that include different types of businesses associated with a single owner.
However, one of the main reasons an entrepreneur finally decides to form a holding company in India is its tax advantages. The Indian corporate and tax law environment is complex, and each state and territory has different provisions. Thus, to find out how a holding company in India can help you to optimize your tax situation, it is best to consult with our law firm in India.
What is a subsidiary company?
If you are interested in searching for attorneys in India to discuss the benefits of having a holding company, at some point, you may have heard the term subsidiary company.
Subsidiary companies are those in which the holding company controls the composition of the members of the board of directors or controls more than half of the capital stock.
Subsidiary companies are closely related to holding companies, but it can quickly become very confusing if you are not used to Indian law.
How to open a holding company in India?
Foreign and local investors who intend to register a company in India have several options in terms of corporate structures to choose from; however, the most chosen type of legal structure is the private limited company because of the extra protection it offers against adverse scenarios because the liability is limited to the extent of one’s shareholding.
In general, there are four steps in the process of opening a company in India:
- Select a company name that is not already registered in India.
- Collect all registration documents of the company with the authorities.
- Once you have the documents, you must file them with the Register of Companies of India.
- The last part of the process is to register for a social security number that allows you to have employees.
We can also help you establish a virtual office for your holding.
To be sure about the type of corporate structure that is most suitable for your business plans, you can seek advice from attorneys in India who have extensive experience advising investors and entrepreneurs who have gone through the situation of wanting to open a holding company and not knowing where to start.
Foreign company owners who wish to remain in the country for more than 180 days will need to apply for a residence permit, as well as make the needed arrangements to register with the authorities upon their entry into the country (such as registering within two weeks of arrival with the Regional Registration Office for Foreigners). Our team can provide complete assistance for immigration to India if this is a step you are interested in.
What are the benefits of having a holding company in India?
Opening a holding company in India offers many possibilities, but most of the time, you will need to be advised by local lawyers to know how to take advantage of them.
One of the main reasons for having this type of company is that the profits of one company can be offset against the economic losses of the other, thus cushioning capital fluctuations.
Let’s take a look at the advantages:
- Tax advantages: In the case of incorporating a holding company in India, you will be able to avoid double taxation in corporate income tax and be taxed as a single group.
- Commercial benefits: In these cases, each of the dependent companies is in charge of a specific area, while the parent company will be responsible for streamlining the overall management.
- Security in the market: The holding company is a business figure that has much more security and trust towards suppliers and customers.
Investors who wish to know more about other matters, such as their options for a prolonged lawful stay in India, can reach out to our team. We also answer questions about residency in India, the need to apply for and obtain a proper visa (depending on nationality), as well as the post-arrival requirements that include the foreigner’s registration with the Indian authorities.
Facts and figures about holding companies in India
- The GDP of India is $3.05 trillion, making it the 6th-largest economy in the world.
- Indian startups raised $7.8 billion in the first quarter of 2021, making it a top destination to establish holding companies too.
- The inflation is just 5.1%.
- India has over 20 holding companies listed on different stock exchanges around the world.
If you have doubts about the advantages that creating a holding company can represent for your business, we recommend you to consult with our law firm in India about it so that we can advise you in a personalized way.
If you are interested in immigration to India, we can provide the needed assistance.