Titi, Ada, Lanre and Emmanuel, four bosom friends from highschool decided to join their mind blowing ideas together as they were all considering how to win a fashion competition and launch their own startup. After much deliberation, boom! a company was born – TALE Designers Ltd with TALE being an abbreviation culled from the combination of the first letters of their names. 

 

As their startup grew, they were considering setting up two subsidiaries – TALE Ateliers Ltd and FitFashion Ltd to meet their business needs of having a makeup studio and a fashion line for children. They now therefore need to know what is required to have these subsidiaries up and running.   

 

We’ve got them covered!

 

A subsidiary company is a company owned and controlled by another company. The owning company usually holds more than half of the shares in the subsidiary company. The owning company is called a parent company or sometimes a holding company. 

 

For example, the success of TALE Designers Ltd can birth more ideas that will boom out as two companies – TALE Auteliers Ltd and FitFashion Ltd. These companies will be subsidiaries of TALE Designers Ltd. Just like a child, every one of its affairs will be coordinated under the nose of its parent or holding company.

 

Where the owning company holds the total shares in a subsidiary, making it the only member of the subsidiary, the subsidiary is said to be a wholly-owned subsidiary. 

 

A subsidiary is a separate legal business entity that is to be registered with the Corporate Affairs Commission (CAC). The process of registering a subsidiary company in Nigeria must be commenced by a holding company which is required to provide evidence of not less than two subsidiaries. 

 

It is worthy to note that a subsidiary company cannot be registered where no holding company is in existence and you can only register a subsidiary as a privat-e limited liability company.

 

In conclusion, to use the name “Holding” as part of the name of a company which is set up as a holding company, it is important to note that the consent of the Registrar-General of the CAC must be obtained.