1. Not a Separate Legal Entity

• A sole proprietorship does not have a separate legal identity from its owner
  
• It is considered an extension of the individual, not an independent business unit
  
• Only registered companies and entities with distinct legal status can become subsidiaries
  
• Since it lacks corporate personality, it cannot be owned by another entity
  

2. Ownership Restriction

• A sole proprietorship must be owned by a single natural person, not a company or body corporate
  
• Indian laws do not permit companies, LLPs, or other legal entities to directly own or operate sole proprietorships
  
• The structure is based on personal ownership and control, not shareholding or corporate relationships
  

3. Subsidiary Definition Requirements

• A subsidiary is defined as a company controlled by another company, either through shareholding or voting rights
  
• This control mechanism applies to registered companies only, not informal or unincorporated businesses
  
• Sole proprietorships have no shares, no board, and no incorporation, making them ineligible for subsidiary status
  

4. Lack of Transferable Ownership

• Sole proprietorships cannot issue shares or be legally transferred in the form of ownership units
  
• Since there is no equity structure, another company cannot acquire or hold a stake in it
  
• Business transfer, if any, must occur through asset sale, not ownership transfer like in companies
  

5. No Formal Relationship with Parent Entity

• A company cannot list a sole proprietorship as a formal subsidiary in its records or financials
  
• If a company wishes to operate a business under its control, it must form a branch, division, or a wholly owned subsidiary company
  
• Legal and financial reporting requirements demand distinct and recognized entity structures, which a sole proprietorship does not fulfill