Claremont chief executive Stephen Goode said Cottesloe and Peppermint Grove already had an established working relationship with each other.
�We took the view that if we create something small, we can always expand,� he said.
Mayors, chief executives and finance representatives from each council have met about creating the subsidiary.
Claremont councillors supported the concept at a meeting last week and will consider a further report on initial funding before determining its 2015-16 budget.
Mr Goode said initial planning stages would require investment from each council, so Claremont would determine an amount and seek approval from each council.
�It will take a year to get the whole thing set up before we can do much,� he said.
Creating a regional subsidiary would allow each local government to retain its autonomy but create a shared administration overseen by a board. A Claremont report stated that an investment of time and finances would be needed to create and implement a subsidiary organisation.
Shared service delivery would not be possible without a business case showing financial savings, improved standards and new opportunities, the report said.
Claremont councillor Paul Kelly said he supported the proposal but was concerned about choosing �who we are getting into bed with�.
�There are very close neighbours that we haven�t included and when this becomes public there may be approaches from other councils,� he said. �To get financial benefit out of this, we need to think bigger.�
Cr Alastair Tulloch said a regional subsidiary would work in the Town�s favour if amalgamations were forced in the future.