Hope for financially stressed subsidiaries of overseas companies – Law.asia

Overseas companies entering the Indian market through the wholly owned subsidiary route do so with hope and expectation. While the majority of ventures have worked out well, there have been instances where the subsidiary failed to take off or encountered operational issues requiring hard decisions on its operations in India.

When faced with such challenges, the subsidiarys logical option is to sell the business to another company that can take over the work and ecosystem it has established. However, if the business owns intellectual property that has to be protected or if it is not mature enough, the overseas management of the subsidiary should consider either voluntarily liquidating it or voluntarily reorganising the business.