In India a holding company is one that controls another company, its subsidiary, by holding more than half its equity share capital or by controlling its board (Sections 2(46) and 2(87) of the Companies Act 2013). To set one up, incorporate it as a private limited company through SPICe+, then move the operating companies' shares under it, usually by a share transfer or swap, paying stamp duty (0.015% on a demat transfer) and checking the tax treatment with a CA first. Three rules shape the design: no more than two layers of investment subsidiaries; no group taxation, so each company files its own return and one company's losses cannot offset another's profits; and if the holding company keeps at least 90% of its net assets in group companies it is a Core Investment Company, which needs RBI registration only once its assets reach Rs 100 crore and it accesses public funds.
The most complete founder guide to setting up a holding company in India: the Companies Act definitions, the two-layer limit, inter-corporate investment limits, FEMA, tax, stamp duty and when RBI's Core Investment Company rules apply.
A 2026 map of every MCA form a private company meets, from name reservation (RUN) and SPICe+ incorporation with e-MOA and e-AOA to share allotment and capital changes.
If a US fund pushes you toward a Delaware structure, this is the India-specific legal and tax manual for what you are actually signing up for. It walks the three flip models (gradual migration, share swap, split economics) and names the real compliance surface: FEMA ODI filings, the 400 percent net-worth ceiling, 12.5 percent LTCG on share transfers post-Budget 2024, transfer pricing above the 1 crore Form 3CEB threshold, POEM and GAAR risk, and ESOP mirror grants. It works a concrete B2B SaaS example flipping at a 4.5M dollar valuation with an 8 to 14 week timeline.
A Delaware flip is not one form: it triggers FEMA ODI filings, transfer pricing, POEM/GAAR exposure, and ESOP re-grants that need real advisors
The 2024 budget's 12.5 percent LTCG rate and Section 47 exemptions change the tax math on how you move shares and IP across the border
Plan the flip end to end (IP assignment, payroll, ESOP mirroring) before you take US money, not after, because unwinding it later is far more expensive
