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Indian Subsidiary Company Registration

Setting up a subsidiary in India can be a transformative step for expanding your business operations and accessing one of the world's largest and most dynamic markets. At IndiaFilings, we specialise in providing comprehensive and tailored services for the incorporation of a foreign subsidiary in India. Our team of experts is here to guide you through the complexities of Indian subsidiary registration, from understanding the legal requirements and navigating regulatory approvals to assisting with compliance and documentation.  Partner with us for the incorporation of a foreign subsidiary in India and unlock India's vast business potential to drive your company's growth and success.

Subsidiary Company

A subsidiary company is often referred to as a sister company, while the company that exercises control over it is known as the parent company or holding company. The parent company holds the authority to control the subsidiary company, either in part or entirely.

The registration process for a foreign subsidiary company in india is governed by the Companies Act of 2013. According to the Companies Act of 2013, a subsidiary company can be defined as a company in which a foreign corporate body or parent entity holds a minimum of 50% of the total share capital. In essence, the parent company exerts a significant influence and control over the subsidiary company.

Types of Subsidiaries in India

In India, there are two primary categories of subsidiaries:

Wholly-Owned Subsidiary

In a wholly-owned subsidiary, the parent company possesses 100% ownership of the subsidiary's shares. However, it's important to note that wholly-owned subsidiaries can only be established in sectors that permit 100% Foreign Direct Investment (FDI).

Subsidiary Company

In this category of subsidiary, the parent company owns 50% of the subsidiary's shares.

Before proceeding with establishing a foreign subsidiary company in india, obtaining approval from the Reserve Bank of India is a crucial prerequisite. This regulatory step ensures compliance with the country's foreign investment regulations and safeguards the interests of all stakeholders involved.

Advantages of Indian Subsidiary Company Registration

There are several compelling advantages associated with the incorporation of foreign subsidiary in india.

Entry into the Indian Market

India's competitive environment offers a plethora of investment opportunities that attract foreign entrepreneurs to establish their subsidiary companies in the country.

Foreign Direct Investment (FDI) in India

FDI involves investments by foreign companies in Indian private companies through share subscriptions or acquisitions. In 2020, the Indian government introduced a provision requiring prior approval for investments from countries sharing a border with India, making Indian subsidiary registration an attractive option for foreign investors.

Perpetual Succession

The concept of perpetual succession ensures that a company's existence remains intact regardless of events like changes in management, transfers of membership, or insolvency. The company continues to operate seamlessly, providing stability and continuity.

Limited Liability

Limited liability is a significant advantage that encourages individuals to opt for company formation over other business structures. This principle extends to Indian subsidiary registration companies, protecting the personal assets of shareholders and directors. The company bears responsibility for its debts to third parties, shielding the personal assets of its stakeholders.

Scope of Diversification

Establishing an Indian subsidiary company registration provides a strategic avenue for foreign businesses to expand their operations. This contributes to the growth and development of the Indian economy and introduces a wide range of goods and services, fostering healthy competition.

Separate Legal Identity

According to the Companies Act, a company is recognized as a distinct legal entity separate from its shareholders and directors. This legal status empowers the company to engage in agreements with other competent entities as an artificial legal person. It also grants the company the ability to initiate legal actions and respond to allegations before the judicial system in its own name, without direct involvement from its members or directors.

Property Ownership and Rental

A subsidiary company, being a legal entity, possesses the authority and right to purchase or rent properties in India for its business activities. To prevent potential conflicts among company members, it is advisable to acquire such properties in the name of the company itself, aligning with the principle of perpetual succession.

These are the major advantages of getting an Indian subsidiary registration and establishing a company.

Regulatory Authorities for Indian Subsidiary Company Registration

The Ministry of Corporate Affairs (MCA is responsible for setting and enforcing the rules and regulations governing company registration and compliance. Registrar of Companies (ROC) offices handle the procedures related to company incorporation, ensuring companies follows legal requirements. Reserve Bank of India (RBI) regulates foreign currency exchange aspects for foreign subsidiary company in india, ensuring adherence to financial regulations.

Requirements and Key Facts about Company Registration in India

Here are the essential elements to consider for the incorporation of foreign subsidiary in India:

  • Company Name: Your new business requires a unique name that is distinct from existing businesses' names or trademarks
  • Shareholders: The parent company can hold 100% of the shares, or any combination of two foreign nationals can be shareholders. It is not mandatory to have an Indian resident as a shareholder.
  • Share Capital: India does not impose a minimum capital requirement for company registration.
  • Directors: A minimum of two directors is mandatory, with at least one director being an Indian resident. Nominee directorship services can be provided if required.
  • Registered Address: Every company in India must have a registered address that is officially recorded in government records. Virtual office address services are available to meet this requirement.
  • Annual General Meeting (AGM): According to the Companies Act, every Indian company must conduct at least one general meeting annually, in addition to two board meetings.
  • Company Secretary: It is mandatory to file three secretarial returns each year, which are handled by a company secretary. IndiaFilings can assist with this requirement. A statutory auditor must also be appointed.

Taxation

  • Professional fees, including government fees for company registration
  • Following incorporation, companies are subject to a profit tax rate of approximately 25.36%.
  • GST (Goods and Services Tax) is applicable to domestic sales, with monthly GST returns and one annual tax return required.

Annual Compliance

India has unique compliance requirements, including mandatory statutory audits even for smaller companies.

  • Foreign subsidiary company in india must appoint a statutory auditor and submit annual filings.
  • Navigating these requirements is crucial for establishing and operating a company in India under the Companies Act 2013.

How to Register a Subsidiary Company in India?

Incorporation of foreign subsidiary in india involves several key steps and compliance requirements. Here's a step-by-step guide on how to register a subsidiary company in India:

Determine the Type of Company

Decide on the type of company you want to establish Incorporation of foreign subsidiary in india.

Obtain Digital Signature Certificate (DSC)

Since the registration process is conducted online, you must obtain a Digital Signature Certificate (DSC) for the proposed directors of the company. The DSC is used to sign the necessary documents during the registration process electronically.

Apply for a Director Identification Number (DIN)

The directors of the subsidiary company must obtain a Director Identification Number (DIN) from the Ministry of Corporate Affairs (MCA). This can be done by submitting the DIN application online.

Name Approval

Please choose a unique name for your subsidiary company and apply for its approval through the MCA's online portal. Ensure that the chosen name adheres to the naming guidelines provided by the MCA.

Draft Memorandum of Association (MoA) and Articles of Association (AoA)

MoA and AoA are legal documents that outline the company's objectives, rules, and regulations. Prepare these documents following the Companies Act 2013.

File Incorporation Documents

Once your chosen name is approved, you must file the incorporation documents, including the MoA, AoA, and other required forms, with the Registrar of Companies (ROC) through the MCA's online portal. The incorporation process is typically done using the SPICe+ form on the Ministry of Corporate Affairs portal.

Payment of Registration Fees

Pay the necessary registration fees to the ROC based on the authorized capital of the subsidiary company.

Obtain a Certificate of Incorporation (COI)

If all the submitted documents and information are in order, the ROC will issue a Certificate of Incorporation. This certificate officially confirms the indian subsidiary registration for a company.

Apply for Permanent Account Number (PAN) and Tax Registration

After obtaining the CoI, apply for a Permanent Account Number and a Tax Deduction and Collection Account Number from the Income Tax Department for the subsidiary company.

Open Bank Account

Finally, open a bank account in the name of the foreign subsidiary company in india.

Compliance with Other Regulations: In addition to the company registration process, ensure compliance with other relevant regulations.

Obtain a GST Number

Goods and Services Tax (GST) registration is required after completing the above steps, mainly if the company engages in various business activities. Every Indian company must apply for a GST number for taxation purposes.

Initiating Business Operations

Once the incorporation of a foreign subsidiary in India is completed, the company can commence its business operations. 

These step-by-step guide provides you a thorough Indian subsidiary registration process.

Compliance Requirements for Indian Subsidiary Registration

To establish a legal and valid Indian subsidiary company registration, compliance with specific regulations is mandatory:

  • Foreign Exchange Management Act (FEMA): Foreign companies based in India must adhere to foreign exchange laws and regulations outlined in the Foreign Exchange Management Act, 1999.
  • Companies Act, 2013: All Indian subsidiary companies must comply with the Companies Act, 2013 provisions.
  • Reserve Bank of India (RBI) Compliances: RBI imposes several foreign exchange management compliances on Indian subsidiary companies.
  • Income Tax Act, 1961: Indian subsidiaries must file income tax returns every year. The corporate tax rate in India is currently 25%.
  • Annual Returns: Companies are required to file annual returns with the MCA and the Registrar of Companies.
  • SEBI (Listing Obligations and Disclosure Regulations): If the subsidiary lists its securities on a stock exchange, it must comply with SEBI regulations.

Taxation of Indian Subsidiary Companies

Indian subsidiary companies are subject to specific taxation policies:

  • Taxes are levied on all income earned within or outside India, including dividends from foreign subsidiaries.
  • Tax rates for foreign subsidiaries in India include 50% for royalty received for technical services from the government or any Indian entity and 40% for other income.
  • A surcharge of 2% is applied if the company's income falls between Rs. 1 Crore and Rs. 10 Crores; for payments above Rs. 10 Crores, a 5% surcharge is levied.
  • A 4% health and education cess is added to the total tax amount.

Concessional tax rates apply to Indian subsidiaries in specific sectors, such as oil exploration, air transportation, and shipping businesses.

FDI in Private Limited Company

100% Foreign Direct Investment is allowed in most sectors. A few sectors, however, require prior approval from the Central Government for foreign investments. These sectors include private security agencies, civil aviation, mining, print media and broadcasting, satellite establishment and operation, pharmaceuticals, and trading of food products.

Foreign entities can establish wholly-owned Indian subsidiaries with 100% ownership, subject to specific qualifications.

For a Private Limited Company

  • No minimum capital requirement
  • Minimum of 2 directors (at least one must be a resident of India)
  • Minimum of 2 shareholders

For a Public Company

  • Minimum of 3 directors
  • At least seven shareholders

How IndiaFilings Can Assist with Indian Subsidiary Company Registration

Still unsure how to register a subsidiary company in India? IndiaFilings simplifies Indian subsidiary registration by offering comprehensive support at every crucial step. From selecting a unique name and obtaining essential Director Identification Numbers (DIN) and Digital Signature Certificates (DSC) to assisting with PAN and TAN applications and setting up a dedicated company bank account, we streamline the entire registration process.

Our expert team ensures compliance with regulatory requirements, including the Foreign Exchange Management Act (FEMA), Companies Act, 2013, Reserve Bank of India (RBI) compliances, and the Income Tax Act, 1961.

We facilitate filing annual returns, guide you through SEBI (Listing Obligations and Disclosure Regulations) compliance, and provide tax services to navigate India's taxation policies. With IndiaFilings as your partner, you can initiate and grow your Indian subsidiary business confidently and efficiently.

Check Business Name Availability

Find if business name can be registered with MCA in India

To register a company in India, the first step is to obtain name approval for the business from the Ministry of Corporate Affairs (MCA). This process takes about 24-48 hours. A private limited company name in India must end with the words private limited. One Person Company ends with (OPC) private limited. LLP end with LLP and Section 8 companies can end with words like foundation, association or institution.

A company name proposed to be registered cannot be identical or similar to an existing company name. Also, every company name must include a word that denotes the activity undertaken. For example, in VERVE Financial Services Private Limited - Financial Services denote the activity undertaken. Check Business Name Availability.

Proprietorship vs Limited Liability Partnership (LLP) vs Company

Features Proprietorship Partnership LLP Company
Definition Unregistered type of business entity managed by one single person A formal agreement between two or more parties to manage and operate a business A Limited Liability Partnership is a hybrid combination having features similar to a partnership firm and liabilities similar to a company. Registered type of entity with limited liability to the owners and shareholders
Ownership
Sole Ownership
Min 2 Partners
Max 50 Partners
Min 2 Shareholders
Max 15 Directors
Max 200 Shareholders

For One Person Company

1 Director
1 Nominee Director
Registration Time 7-9 working days
Promoter Liability Unlimited Liability Limited Liability
Documentation
LLP Deed
Incorporation Certificate
MOA
AOA
Governance - Under Partnership Act LLP Act, 2008 Under Companies Act,2013
Transferability Non Transferable Transferable if registered under ROF Transferable
Compliance Requirements
Income tax filing if turnover is more than Rs.2.5 lakhs

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India Business Setup FAQ's

Zero Late Fee Platform

Many small businesses pay lakhs in penalty every year to the Government for late filing various statutory returns. Such penalty or late fee paid is not tax deductible and is a drain on profitability. At IndiaFilings, our mission is to provide the most affordable services to our customers and help them avoid all late fee.To achieve our mission - we have built enterprise grade technology to help you proactively know the upcoming compliance and avoid penalty.Checkout our compliance services below, talk to an Advisor and stop paying unwanted late fees.

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Related Business Registrations

In addition to registration or incorporation, a business may require other registrations depending on the business activity undertaken. Talk to an Advisor to find out registrations your business may require post registration.

MCA Compliance

Every registered entity must fulfill its compliance obligations at the end of each financial year. These typically encompass tasks such as auditing financial records, filing income tax returns, and submitting annual forms to the MCA.

Form Company Compliance Due date Penalty
COB Filing Commence of Business Certificate To be filed before 180 days of company Incorporation Rs.50,000 for non-compliance
DIR 3 EKYC Any director with DIN On or Before 30th September every year Deactivation of the DIN A late filing fee of Rs.5,000 Disqualification of the Directors
Form ADT 1 Appointment of auditor Within 15 days from the date of appointment of the Auditor Late fees will be applicable, with fees ranging from 2 to 12 times the nominal fee, depending on the number of days of delay.
Form AOC 4 Filing financial statements of the company 30 days from the conclusion of the AGM Late fees will be applicable, with fees ranging from 2 to 12 times the nominal fee, depending on the number of days of delay.
Form MGT 7 Annual Returns of the Company 60 days from the conclusion of the AGM

In addition to the above filings, depending on the type of entity and business activity more compliance filing maybe applicable. Please check with an IndiaFilings Advisor to help you with the compliance for your company.

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Customer Reviews For India Business Setup

IndiaFilings has over 1 lakh customers and we have completed over 7 lakh services through our platform. At IndiaFilings, we take pride in the services delivered by us and guarantee your satisfaction with our services and support. We constantly improve and strive to deliver the best accounting, financial or secretarial services through the internet.

SUSMITHA K

Indian Subsidiary
Verified Customer (04 April 2022)
How can we improve?
Susmitha has been fantastic through out the journey and very professional to work with I will highly recommend her workThanks for all the help

MUHAMMAD RAFIQUE

Indian Subsidiary
Verified Customer (11 March 2022)
How can we improve?
Muhammad Rafique is Highly professional and always helpful throughout the process

DHVANI MODI

Indian Subsidiary
Verified Customer (20 February 2020)
How can we improve?
Dhavni is incredibly thorough in her job and very helpful She was always available to support me I am very much thankful to Dhavni She is an outstanding customer engagement manager

NAGA KRISHNAVENI V

Indian Subsidiary
Verified Customer (24 September 2019)
How can we improve?
It was a pleasure working with Naga Krishnaveni and Reema Lovelyn and I really appreciate them taking my calls and answering all my questions as swiftly as they did I also appreciate their professionalism and working with me given my timezone (USA)

LOURDU ANJALI A

Indian Subsidiary
Verified Customer (06 May 2019)
How can we improve?
Good

IMAYAVARMAN T

Indian Subsidiary
Verified Customer (24 January 2019)
How can we improve?
got response for our queries and satisfied
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