As a foreign company, expanding your business to India can be a smart move. With its large and growing economy, India offers a wealth of opportunities for businesses of all sizes. One way to establish a presence in India is by registering a subsidiary company.
A subsidiary company is a separate legal entity that is owned by a parent company. It operates independently, but is still controlled by the parent company. This allows the parent company to have a presence in India without having to set up a new company from scratch.
The process of registering a subsidiary company in India can be complex, but with the right guidance, it can be a smooth and successful endeavor.
At VenturEasy, we have a team of experts who specialize in helping foreign companies navigate the Indian business landscape. Our services include assistance with subsidiary company registration, compliance with Indian laws and regulations, and guidance on setting up a local office and bank account opening.
Meaning – Subsidiary company:
A subsidiary is a company with voting stock (that is more than 50%) controlled by another company, usually referred to as the parent company or the holding company. In cases where a parent company owns a foreign subsidiary, the subsidiary must follow the laws of the country where it is incorporated and operates. Hence, if a foreign company is incorporated in India, then it has to follow the applicable laws in India.
How to Register a Subsidiary Company in India?
Selecting the type of Company-
According to FEMA guidelines, Foreign Direct Investment (FDI) is not allowed in case of Proprietorship, Partnership Firm and One Person Company. Though investment in LLP’s is allowed, but it requires prior approval of the RBI.
Hence, the easiest and fastest way set up a business in India by NRI’s and Foreign Nationals/entities is through incorporation of a Private Limited Company.
- Capital: There is no minimum capital required to form a Private Limited Company in India.
- Directors: Minimum two directors are required to incorporate a Private Company in India. Both should be individuals and at-least one of whom should be a resident of India. (A resident of India is a person who has stayed in India for at-least 182 days in the current FY).
- Shareholders: Companies Act, 2013 requires that a Private Limited Company have a minimum of two shareholders. There is no condition for residential status of shareholders. Shareholders can be either individuals or entities or a combination of both.
Documents Required for Registration of Foreign Companies in India
- For Indian Resident Director: Photograph, Copy of PAN Card, Copy of Aadhar Card, Copy of Passport/ Voter ID/Driving License , Bank Statement/Electricity/Telephone bill in their address – not older than 2 months.
- For Foreign Directors/Shareholders and Authorized Representative of Foreign Company Photograph, Copy of Passport, Copy of Driving License, Bank Statement/Electricity/Telephone bill in the country of residence – not older than two months.
- For Indian Company: Address Proof of Proposed Place of Business (Rental Agreement of Registered Office), Utility Bill (Electricity, Telephone etc.) for the premises – not older than 2 months, NOC for use of premises as Registered Office.
Procedure of Registration of Subsidiary Companies in India:
Step 1. Name Approval: The first step towards Company Registration is reserving the Company name. In case of a foreign subsidiary, it is permissible to use the same name as that of the parent company with the addition of the word “India” to it. The name is approved, provided the same is not identical to existing entities or considered undesirable by law.
Step 2. Procurement of DSC: In parallel, the Digital Signature Certificate (DSC) will be procured for the proposed directors of the Company. This DSC is required to file the Incorporation application digitally and will also be used for future compliance reporting.
Step 3. Incorporation Application: This is the final step in the Company Registration process. It requires filing of the Memorandum and Articles of Association of the Company along with various other documents duly executed by the proposed directors and shareholders.
List of Incorporation documents to be executed:
- Articles of Association
- Memorandum of Association
- Declaration by Directors in form DIR 2
- Declaration of Directors/Shareholders and Authorized Representative in Form INC 9
- PAN Undertaking from foreign company and directors
Generally, the incorporation documents are required to be self-attested by Indian Nationals. However, in case of Foreign Nationals, the process is as under:
In the documents are signed outside India, then the same have to be notarized by a Public notary of the residence country and consularized or apostilled by the competent authority, as the case may be.
If the documents are signed in India, then copy of Visa and stamped passport, proving his/her presence in India at the time of signing is required.
If the subscriber is a foreign entity, then the Incorporation documents should be signed by the representative of the foreign entity. An Authorization Letter duly stating the name of the Authorized Person and the number of shares subscribed should be notarized, consularized or apostilled, as the case may be in the home country of the subscriber company.
Once the Incorporation application is approved, the Registrar would issue a Certificate with a Corporate Identification Number (CIN). The PAN and TAN of the Company would also be allotted simultaneously.
Treatment of Share Capital invested by the Holding Company and required compliances:
Foreign Investments in Indian Companies are regulated by FEMA Guidelines and the Reserve Bank of India. Whenever the holding company invests funds in the share capital of the Indian subsidiary, it has to follow RBI guidelines along with compliances under Companies Act 2013.
Post Incorporation Compliance with the RBI:
A two-stage reporting procedure is to be followed when a company is raising funds from a foreign investor:
- On receipt of funds: The Company has to provide details in an “Advance Reporting Form” to the RBI within 30 days of receiving funds from foreign investor(s).
- The company has to issue shares within 180 days from the date of receiving funds.
- On allotment of shares: The company has to report in specified form (FC-GPR) to the RBI, within 30 days from the date of issue of shares along with:
– A Certificate from the Company Secretary certifying that the company has complied with the procedure for issue of shares as laid down under the Foreign Direct Investment (FDI) Scheme, and,
– A certificate from a Chartered Accountant indicating the manner of arriving at the price of the shares issued to the foreign investors.
Apart from the above, Annual return on Foreign Liabilities and Assets is required to be submitted reporting all the investments received during the year.
We understand that every business is unique and we tailor our services to meet the specific needs of each client. Our goal is to help foreign companies establish a strong presence in India and take advantage of the many opportunities that the country has to offer.
If you are interested in learning more about our services for subsidiary company registration in India, please contact us today. We look forward to helping you succeed in the Indian market. Drop us an email with your queries/ requirements at firstname.lastname@example.org
We also assist our clients regularly with Compliances for a Private Limited Company in India and Foreign Subsidiary Compliances in India
- Subsidiary Company Registration in India - February 7, 2023
- Wholly Owned Subsidiary (WoS) Compliances in India - September 7, 2022
- Mandatory Compliances for an LLP (Limited Liability Partnership) - September 1, 2022
2 Replies to “Subsidiary Company Registration in India”
Hi, we’re a consulting company in the US incorporated in California as a LLC. We want to hire Indian nationals as our employees. Love to understand how the whole process work to form a subsidiary in India. Could we jump on a call.
We would like to know the total fees and processing time for incorporating wholly subsidiary company of Singapore company.
We are looking forward to hearing from you soon.
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