What is a Subsidiary? A subsidiary company is defined under Section 2(87) of the Companies Act, 2013 as a company where another company (holding company) meets either of the following conditions: ✅ Owns more than 50% of its total share capital; or ✅ Controls the composition of its Board of DirectorsRead more
What is a Subsidiary?
A subsidiary company is defined under Section 2(87) of the Companies Act, 2013 as a company where another company (holding company) meets either of the following conditions:
✅ Owns more than 50% of its total share capital; or
✅ Controls the composition of its Board of Directors.
The parent (holding) company has significant control over the subsidiary’s operations, decision-making, and financial reporting.
What is a Joint Venture (JV)?
A joint venture is a business partnership where two or more companies collaborate for a common goal. Although the Companies Act, 2013 does not explicitly define a JV, it is generally understood as a strategic alliance where parties:
✔️ Contribute capital, resources, and expertise
✔️ Share risks and profits
✔️ Make joint decisions as per the JV agreement
A JV can be structured as a company, partnership, or contractual arrangement, depending on the agreement between the parties.
Key Differences Between a Subsidiary and a Joint Venture
| Factor | Subsidiary | Joint Venture |
| Legal Definition | Defined under Section 2(87) of the Companies Act, 2013. | Not explicitly defined under the Companies Act but recognized under business laws. |
| Ownership & Control | Parent company holds >50% ownership and exercises control. | Ownership is shared as per the JV agreement. |
| Legal Structure | A separate legal entity from the holding company. | Can be a company, partnership, or contractual entity. |
| Financial Consolidation | Financial statements must be consolidated with the parent company as per Ind AS 110. | Usually accounted for using the equity method under Ind AS 28. |
| Liability | The subsidiary is legally separate, but the parent may be liable in certain cases. | Liability is shared based on the JV agreement. |
| Decision-Making | The holding company has full control over operations and management. | Decisions are made jointly as per the JV agreement. |
| Purpose | Formed for long-term expansion under the holding company. | Usually created for a specific project or business collaboration. |
| Dissolution | Exists indefinitely unless sold, merged, or wound up. | Can be terminated as per the agreement or after project completion. |
Real-Life Examples
🚗 Subsidiary Example:
Maruti Suzuki India Ltd. is a subsidiary of Suzuki Motor Corporation, Japan, where Suzuki holds a majority stake and controls its operations.
🔩 Joint Venture Example:
Tata Steel and Nippon Steel formed a JV in India to manufacture high-quality steel, sharing expertise, investment, and control.
The number of bank accounts an individual should open depends on their financial goals, income sources, and spending habits. Here’s a practical approach: 1️⃣ Primary Savings Account (Must-Have) Used for salary credits, savings, and daily transactions. Choose a bank with good digital banking servicesRead more
The number of bank accounts an individual should open depends on their financial goals, income sources, and spending habits. Here’s a practical approach:
1️⃣ Primary Savings Account (Must-Have)
2️⃣ Secondary Savings Accounts (For Budgeting & Goals)
3️⃣ Investment accounts (For Wealth Growth)
4️⃣ Business or Freelance Accounts (If Self-Employed)
5️⃣ Joint Account (If Needed)
💡 Best Practice:
See less✅ 2-3 accounts are sufficient for most individuals.
✅ Avoid multiple accounts unless necessary (to prevent maintenance fees and complexity).