What you need to know when setting up a subsidiary company in the UK

Back to News

Launching a subsidiary may be a prudent move for your company. In the United Kingdom, it’s not difficult to establish one if you want to. The process is almost similar to starting up a conventional company. This read aims at informing you all about how you can launch a subsidiary successfully without getting into a legal problem.

What is a Subsidiary Company?

When setting up a business in the UK, the main questions that come into the light are the position of the said subsidiary in the company and what it will be doing. A subsidiary enterprise is a business that is either owned in part or wholly by another company. The main company that has ownership over the subsidiary is referred to as a holding company or parent company. You should bear in mind that a parent company slightly varies from a holding company.

How To Set Up a Subsidiary

A subsidiary business may be entirely or partly owned by another enterprise, but you should note that this isn’t like operating under a different brand name. Technically, the subsidiary is functioning as a separate company, and hence will be incorporated like so.

When starting your business with Your Company Formations, you can opt for it to be under a corporate ownership structure compared to an individual. This would then enable you to create a subsidiary enterprise via our online formation software. You require at least one individual to give the requisite documents and stand in as a director for the newly formed enterprise. The acting director can be the same individual from the parent company.

Additionally, you’ll be required to provide a registered office address. The submitted office address will need to be in the country you want to establish your subsidiary company, which in this case is in the UK.

To form a company like this, you’ll need to have a sole director. The requisite for a secretary was renounced a couple of years ago. The only condition is that the director cannot stand in as the secretary in this case. If you make a registration as a sole director, you’ll need to provide both your service address and residential address. The public records will only show your service address.

The objective here is that in the several documents you provide detailing shareholders, you’ll have a sole director and another enterprise as a shareholder. It’s against the law to have the whole business under the ownership of another company.

When you provide the requisite documentation, you will receive feedback from Companies House within 24 hours.

Making Changes

As with other private LLCs, you can proceed to make alterations to your branch company after it has undergone incorporation. You have the option of selling shares of the business to other parties so that it has several owners, or you can even change the holding enterprise into a fully-fledged company that’s on its own.

Should You Form a Subsidiary Company?

Establishing a subsidiary enterprise is feasible in certain circumstances. The only time you should consider forming a subsidiary is when:

You are Operating Overseas – International companies will always prefer establishing their subsidiary company in the United Kingdom in case their parent company is located outside the country.

Two Different Businesses –At times, you may have several branches of your company that completely vary and need to be officially separated. Forming a subsidiary to distinguish the two entities is practical.

Team Differences – Companies decide to form a subsidiary when they have personnel working on varying projects at a different office. Perhaps the task is probably not pertinent to the main goal of the business, hence creating a subsidiary can enable them to do an official separation.

Conclusion

Establishing a subsidiary company isn’t a decision that should be made flimsily. Rather than doing this, you can just launch a new company from the ground. However, if you are set on a subsidiary, you can enlist the services of a professional to aid.