Company · Structural change
How many subsidiary layers can we legally have?
The short answer
Under the Companies (Restriction on Number of Layers) Rules, 2017, a company can have no more than two layers of subsidiaries — looked at through Section 2(87) of the Companies Act 2013. Banking companies, NBFCs, insurance companies, and government companies are exempt, and there is a one-foreign-layer allowance. Where required, the company must file CRL-1 declaring the number of subsidiary layers.
What gets filed with MCA
Return declaring the number of layers of subsidiaries, where required
Section 2(87) proviso read with Companies (Restriction on Number of Layers) Rules, 2017
The sequence
- 1Map your current group structure and count subsidiary layers under Section 2(87)
- 2Check whether you qualify for an exemption — banking, NBFC, insurance, government, or the one foreign layer allowance
- 3If the structure exceeds two layers, plan a restructuring before adding another subsidiary
- 4File CRL-1 to declare the number of layers of subsidiaries where the rules require it
Do it with us — or check it yourself first
Questions founders actually ask
What counts as a layer of subsidiaries?
A layer is a subsidiary relationship in the group structure, read through Section 2(87) of the Companies Act 2013 and the Companies (Restriction on Number of Layers) Rules, 2017. The limit is two layers, not two subsidiaries.
Are there any exemptions to the two-layer cap?
Banking companies, NBFCs, insurance companies, and government companies are exempt. There is also a one-foreign-layer allowance built into the rules.
What form do we file to declare our subsidiary layers?
File CRL-1 — the return declaring the number of layers of subsidiaries, where required under Section 2(87) proviso read with the Companies (Restriction on Number of Layers) Rules, 2017.
Last verified 2026-08-24 against MCA V3 records and ICSI reference material. Form-level deadlines and penalties live on the linked form pages and update there.