Board Resolution for Incorporation of Subsidiary

According to the Companies Act, 2013 a company would become the subsidiary of the other company where the latter controls the composition fo the Board of Directors of the former company. Since the Board of Directors are appointed by the shareholders, any entity holding over 51% of the share of a company is said to be the parent or holding company. The following board resolutions format can be used for incorporation of an

Indian subsidiary company.

Incorporation of New Company as Subsidiary

RESOLVED that pursuant to the Memorandum of Association of the Company and section 2(87) of the Companies Act, 2013, approval of the Board of Directors be and is hereby accorded to the formation of a new company under the name of <new company name>, or <new company name 2>, or <new company name 3> as may be approved by the Registrar of Companies. RESOLVED FURTHER that the Memorandum of Association of the Company and the Articles of Association of the new company vesting in the company the power to control the composition of the Board of Directors of the new company in the Company, draft whereof placed before the meeting be and is hereby approved.

Incorporation of a Subsidiary

RESOLVED that <Mr. Name> and <Mr. name>, Directors of the company, be and are hereby jointly and severally authorised to incorporate a company as a subsidiary of the company under the provisions of the Companies Act, 2013 with the name and style of <Choice of Company Name 1> or <Choice of Company Name 2> or<Choice of Company Name 3>, whichever is made available by the Registrar of Companies with an authorised capital of <Authorised Capital Amount> divided into <Number of Shares> equity share of<Face Value> each; and having the following objects as its main objects:

First object of the company
Second object of the company
Third object of the company

The Articles of Association of the subsidiary to be incorporated shall be in pari matreia with those of the company. RESOLVED FURTHER that <Director 1 Name> and <Director 2 Name>, be and are hereby jointly and severally authorised to do all acts and deeds necessary in connection with and incidental and ancillary to the incorporation of the subsidiary aforesaid.

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Frequently Asked Questions

Common questions about Incorporation of Subsidiary under Companies Act 2013.

A subsidiary company is a company controlled by another company, known as the parent or holding company. When a company controls the composition of the Board of Directors of another company, the latter becomes its subsidiary.

Companies may incorporate a subsidiary company for various reasons, such as expanding their business operations into new markets, diversifying their product or service offerings, or separating certain business units for legal or operational purposes.

According to the Companies Act, 2013, a company can incorporate a subsidiary if its Memorandum of Association allows it to control the composition of the Board of Directors of the new company. The Board of Directors must pass a resolution approving the incorporation of the subsidiary and its proposed Memorandum and Articles of Association.

Yes, a subsidiary company can have different main objects than its parent company. The Board Resolution for incorporating the subsidiary must specify the proposed main objects of the new company.

The Board Resolution authorizes specific directors of the parent company to incorporate the subsidiary company and take all necessary actions in connection with the incorporation process.

The Registrar of Companies approves the proposed name of the subsidiary company and registers the company after all the necessary documents and formalities are completed.

Yes, the Board Resolution specifies the proposed authorized capital and the number of equity shares for the subsidiary company, which can be different from that of the parent company.

Having the Articles of Association of the subsidiary company in pari materia (i.e., similar or identical) with those of the parent company ensures that the parent company can control the composition of the subsidiary's Board of Directors, as required by the Companies Act, 2013.

No, according to the definition in the Companies Act, 2013, a subsidiary company can only have one parent or holding company that controls the composition of its Board of Directors.

Some potential benefits of incorporating a subsidiary company include limited liability protection, tax advantages, operational efficiency, and the ability to operate in different markets or industries while maintaining a separate legal entity from the parent company.