The process of starting the holding company is similar to the process of setting up a private limited company. The application for the same shall be submitted to the ministry of corporate affairs.
What is Holding Company?
A holding company is a parent company which has a control over the other company. The company controlled by the holder company is called a subsidiary company. Thus “control” is used as the benchmark in company law to determine holding company status. The parent company or the holding company can exercise the control through control of management or through ownership of shares. As per Companies Act, 2013 the world holding company is defined as a company in relation to one or more other companies, meaning a company of which such companies are subsidiary companies.
The entire process of setting up a holding company is carried out online, and all information and documentation are submitted to the ministry of corporate affairs. The process of setting up a holding company is very much similar to the process of setting up a private limited company.
Process of formation
Process of forming a holding company is as follows-
- Choose a name- Utmost care should be taken while choosing a name for the company. The name chosen should be distinctive and suggestive of the principal activities of the company. The name chosen becomes the identity of the company.
- Have a company address- The company address is the registered office of the company at which all the official communications will occur. Post registration the applicant has to provide the permanent address of the registered office with ownership documents.
- Appoint at least two directors - A company needs minimum two directors who have DIN to get registered. At least one of the two directors should be resident in India.
- Apply for DIN and DSC for each director- Every person who intends to become a director needs to obtain a DIN. DIN is eight digits unique number allotted to every person who wants to become a director. It is allotted by the ministry of corporate affairs. Digital Signature Certificate (DSC) is a digital signature which can be attached to an electronic document to verify the applicant’s identity.
- Have at least two shareholders: Minimum 2 shareholders are required to incorporate a company and maximum of 200 shareholders are allowed.
- Draft memorandum of association and articles of association:
· Memorandum of Association- Memorandum of association is a document which defines the relationship of the shareholders with the company. It basically contains the objectives and powers of the company.
· Articles of association- They are the bye-laws which define the relationship of the company with outsiders. Information such as the total number of members, share capital, rules for a meeting of the company, voting power of members must be included in the Articles of Association.
- File INC -32 with MCA – Spice INC-32 is an integrated form which is sent along with spice MOA 32 and spice AOA 34 for the incorporation of the company.
- Obtain the certificate of incorporation- It is a certificate issued by the Ministry of corporate affairs/Registrar of companies for the commencement of business Certificate of incorporation is a conclusive evidence of the incorporation of the company.