Indian Subsidiary is any company that is owned by a foreign company is known as an Indian Subsidiary. The Companies Act,2013 governs the registration process for the Indian Subsidiary Company.
Many foreign companies want to start operating in India as India is one of the largest and fast-growing markets. A foreign national or an entity except for a citizen belonging to Pakistan or Bangladesh can invest and own a company in India by acquiring shares of the particular company, subject to India's Foreign Direct Investment Policy. The Economic liberalisation of 1991 acted as a catalyst for the Foreign Direct Investment in India.
At least one director needs to be an Indian director with an Indian address for the incorporation of an Indian subsidiary company. One person should be appointed as the representative of a foreign Company in India.
When a foreign company owns and controls a significant stake in India's Company, it is called an Indian subsidiary company.
IndiaFilings can help with Indian Subsidiary registration while providing nominee directors and registered office service in India.
An applicant who is a foreign national has to submit the following documents:
The Indian Director has to submit the following documents:
The representative of the foreign company has to submit the following documents:
A digital signature is required to file the Incorporation documents and the compliance documents for a company. Digital signatures must be obtained for one or more directors of the company. Here are the documents required for obtaining the digital signature for a foreign national:
Foreign nationals residing in the native country
If the country is a signatory of the Hague Convention:
If the naive country is not a signatory of the Hague convention:
By foreign nationals residing in India:
While incorporating an Indian subsidiary, the requirements of the SPICe+ form have to comply. The company has to choose a unique name and the same to be reserved for a specific time. The title should be unique and comply with the provisions related to the Intellectual property Law force in India.
The DIN is issued by the regulatory authority for the appointment of directors. In addition to this, the entity must also apply for the Digital Signature Certificate. Documents can be electronically signed and sent online.
After applying for the DSC AND DIN, it is necessary to apply for the PAN and TAN. This is a mandatory requirement.
An Indian subsidiary company has to open a Bank account. This is mandatory as the subsidiary company will have to carry on behalf of the Subsidiary.
A GST number will be provided to the company. It is mandatory for all the companies established in India to apply for GST registration.
After the completion of the procedure mentioned above, the company can start carrying out business operations.
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With the DSC application process, the company's name approval can be obtained for the proposed company. The name should be unique, and it should end with the words 'Private Limited'. Read more about Naming an Indian Private Limited Company.
Once the name's approval is obtained, the Incorporation documents can be filed with the Ministry of Corporate Affairs to incorporate the company. The incorporation documents include the affidavits and declaration from the directors, Memorandum of Association, Articles of Association, and Registered office address proof.
The affidavit and declarations from the Directors contain certain declarations from the Directors. The testimony and the declaration should be executed independently for each of the directors and notarized.
The shareholders show their intention for becoming a shareholder in the company to be incorporated by subscribing to the MOA and AOA.
if the foreign company is a subscriber to the MOA and AOA of the proposed Indian Company, the following documents must be submitted:
In order to incorporate a Private Limited Company in India, the following documents need to be submitted.
IndiaFilings will help the applicant obtain the DSC and the Director Identification Number (DIN) from the Ministry of Corporate Affairs.
After the name approval is obtained, it is necessary to draft the Memorandum of Association and file it within 60 days to complete the incorporation process.
A minimum of two shareholders is required for a private limited company. Hence, the holding company in a foreign country must pass a Board resolution for the Incorporation of the Company in India and the subscription of shares of the proposed company.
The Foreign Company can hold around 99.99% of the total shares of the Indian Company, while 0.01% of the company's issued shares can be controlled by an Indian in trust with the foreign company.
Once the company is incorporated, it is necessary to open the Bank accounts and obtain the required licenses. Simultaneously, it is necessary to make filings with the RBI to indicate India's foreign investment through the automatic route.
FDI in Private Limited Company is allowed for foreign entities subject to the FDI guidelines. FDI in a Private limited company falls under two categories automatic route and approval route.
Currently, 100 % of FDI is permitted in most sectors, exempting the capped and restricted sectors.
If automatic approval is not allowed, it is necessary to obtain prior consent from the Foreign Investment Promotion Board of the Indian government. Further, citizens or entities from Bangladesh or Pakistan can invest in India only under the approval route.
In a Private Limited Company, FDI can be through various equity instruments. Indian companies can issue equity shares, preference shares, and convertible debentures again, subject to the norms and the guidelines.
The equity shares of a private limited company issued under the FDI must be at a fair value. If an NRI newly incorporates a company or subscription to the association's memorandum during the company incorporation, the shares can be issued at face value.
Here's a list of the industries that require government approval for investment by Foreign Company or Foreign National:
A private limited company must have a minimum of two shareholders and two directors. A shareholder can be any person or even a corporate entity. Foreign nationals can become the directors of the private limited company. But it is to be noted that at least the director should be Indian with Indian residency.
There is no requirement for the Indian director to be a shareholder in the company. Most foreign companies prefer to incorporate a company in India with three directors- two foreign national directors and one Indian Director.
The 100% shares of the Indian Company can be held by a combination of foreign companies or nationals. One corporate entity or person cannot have all the shares of an Indian private limited company.
There are certain compliances which the Indian subsidiary companies need to adhere to mandatorily.
Companies Act, 2013 - A company formed in India would have to comply with compliance under the Companies Act, 2013.
Foreign Exchange Management Act,1999 - It is necessary to comply with India's respective foreign exchange laws when a foreign company has is planning to establish in India.
RBI Compliance - The Indian Subsidiary of a foreign company also has to comply with the respective RBI compliances.
Income Tax - All the companies currently operating in India have to file Income Tax returns. It is necessary for the Indian subsidiary company has to comply with the individual tax rates.
Annual returns of ROC and MCA - The companies established in India must file the yearly compliances with the Registrar of Companies and the Ministry of Corporate affairs.
SEBI- If the Indian subsidiary company lists its securities in a stock exchange, then the compliance must be followed as per the laws under the Securities Exchange Board of India.
The Indian Subsidiary of the foreign Company is separate from its foreign parent. Even though there is control on the management of the Indian Subsidiary still there, it has different and independent legal existence from its foreign parent.
A company under the respective conveyance law can purchase properties in India. This is an add-on benefit for the Indian subsidiaries.
Through an Indian subsidiary company, a foreign entity can achieve its aim of expansion. They can also launch new areas and products through this process.
Before launching new products, it is essential to conduct market research.
As the company is a separate legal person, it can enter into contracts and even agreements. Under the Companies Act, 2013, an individual can enter into legal contracts. Such an entity can enter into contracts and even file legal cases.
The Indian Subsidiary will succeed even after there are many changes in the management of the company. The operations cannot be halted, and the functions can be easily carried on once the company is established.
Open a new or link your existing ICICI bank current account with LEDGERS for seamless bank account reconciliation, account balance check and sending of payments through NEFT / RTGS / IMPS.
Open a new or link your existing DBS bank business account with LEDGERS for seamless bank account reconciliation, account balance check and sending of payments through NEFT / RTGS / IMPS.
Opening a current account for an India Subsidiary is easier when compared to opening of current account for a sole proprietorship firm as a company is a registered legal entity – recognized by law. Therefore, once a company is incorporated, a bank account can be opened in the name of a company with the incorporation certificate of the company and identity/address proof of the Directors.
To incorporate a private limited company, a minimum of two people are required. A private limited company must have a minimum of two Directors and can have upto a maximum of fifteen Directors. A minimum of two shareholders and a maximum of upto 200 shareholders are allowed in a private limited company.
The Director needs to be over 18 years of age and must be a natural person. There are no limitations in terms of citizenship or residency. Therefore, even foreign nationals can be Directors in a Indian Private Limited Company.
You can start a Private Limited Company with any amount of capital. However, fee must be paid to the Government for issuing a minimum of shares worth Rs.1 lakh [Authorized Capital Fee] during the incorporation of the Company. There is no requirement to show proof of capital invested during the incorporation process.
An address in India where the registered office of the Company will be situated is required. The premises can be a commercial / industrial / residential where communication from the MCA will be received.
No, you will not have to be present at our office or appear at any office for the incorporation of a Private Limited Company. All the documents can be scanned and sent through email to our office. Some documents will also have to be couriered to our office.
Identity proof and address proof is mandatory for all the proposed Directors of the Company. PAN Card is mandatory for Indian Nationals. In addition, the landlord of the registered office premises must provide a No Objection Certificate for having the registered office in his/her premises and must submit his/her identity proof and address proof.
IndiaFilings.com can incorporate a Private Limited Company for in 7-15 days. The time taken for incorporation will depend on submission of relevant documents by the client and speed of Government Approvals. To ensure speedy incorporation, please choose a unique name for your Company and ensure you have all the required documents prior to starting the incorporation process.
To incorporate a Company quickly, make sure the proposed name of the Private Limited Company is very unique. Names that are similar to an existing private limited company / limited liability partnership / trademark can be rejected and additional time will be required for resubmission of names.
Once a Company is incorporated, it will be active and in-existence as long as the annual compliances are met with regularly. In case, annual compliances are not complied with, the Company will become a Dormant Company and maybe struck off from the register after a period of time. A struck-off Company can be revived for a period of upto 20 years.
A Digital Signature establishes the identity of the sender or signee electronically while filing documents through the Internet. The Ministry of Corporate Affairs (MCA) mandates that the Directors sign some of the application documents using their Digital Signature. Hence, a Digital Signature is required for all Directors of a proposed Company.
Director Identification Number is a unique identification number assigned to all existing and proposed Directors of a Company. It is mandatory for all present or proposed Directors to have a Director Identification Number. Director Identification Number never expires and a person can have only one Director Identification Number.
Authorized capital of a Company is the amount of shares a company can issue to it shareholders. Companies have to pay the Government an authorized capital fee to issue shares in a Company. Companies have to pay authorized capital fee for a minimum of Rs.1 lakh.
A private limited company must hold a Board Meeting atleast once in every 3 months. In addition to the Board Meetings, an Annual General Meeting must be conducted by the Private Limited Company, atleast once every year.
Yes, a NRI or Foreign National can be a Director in a Private Limited Company after obtaining Director Identification Number. However, atleast one Director on the Board of Directors must be a Resident India.
Yes, NRIs / Foreign Nationals / Foreign Companies can hold shares of a Private Limited Company subject to Foreign Direct Investment (FDI) Guidelines.
100% Foreign Direct Investment is allowed in India in many of the industries under the Automatic Route. Under the Automatic Route, only a post-investment filing is necessary with the RBI indicating the nature of investment made. There are a few industries that require prior approval from the RBI, in such cases, approval must first be obtained from RBI prior to investment.
Last updated: Mar 02, 2021