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Indian Subsidiary in Faridabad

Setting up an Indian Subsidiary in Faridabad 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 incorporating an Indian Subsidiary. Our team of experts is here to guide you through the complexities of subsidiary registration, from understanding the legal requirements and navigating regulatory approvals to assisting with compliance and documentation. Partner with us for setting up an Indian Subsidiary and unlock India’s vast business potential to drive your company's growth and success in Faridabad.

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 subsidiary 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 subsidiary, 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

There are several compelling advantages associated with setting up an Indian Subsidiary.

  • Entry into the Indian Market: India’s competitive environment offers a plethora of investment opportunities that attract foreign entrepreneurs to establish their subsidiary in the country in Faridabad.
  • 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 an Indian Subsidiary 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 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 provides a strategic avenue for foreign businesses to expand their operations. This contributes to the growth and development of the Indian economy in Faridabad and introduces a wide range of goods and services, fostering healthy competition.

These are the major advantages of getting an Indian Subsidiary and establishing a company in Faridabad.

Regulatory Authorities for Indian Subsidiary

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 follow legal requirements. Reserve Bank of India (RBI) regulates foreign currency exchange aspects for Indian Subsidiary, 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 an Indian Subsidiary:

  • Your new business requires a unique name that is distinct from existing businesses' names or trademarks.
  • 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.
  • India does not impose a minimum capital requirement for company registration.
  • A minimum of two directors is mandatory, with at least one director being an Indian resident. Nominee directorship services can be provided if required.
  • 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.

To learn more, explore our comprehensive guide on starting a foreign company's subsidiary in India.

Taxation

Professional fees, including government fees for company registration, are applicable. 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. The subsidiary 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 an Indian Subsidiary?

Incorporation of an Indian Subsidiary involves several key steps and compliance requirements.

  • Decide on the type of company you want to establish Incorporation of an Indian Subsidiary.
  • 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.
  • 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.
  • Prepare the Memorandum of Association (MoA) and Articles of Association (AoA) following the Companies Act 2013.
  • Once your chosen name is approved, 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.

To know more about incorporation procedures, visit our detailed guide on the Articles of Association (AoA).

Compliance Requirements for Indian Subsidiary

To establish a legal and valid Indian Subsidiary, compliance with specific regulations is mandatory:

  • Foreign companies based in India must adhere to foreign exchange laws and regulations outlined in the Foreign Exchange Management Act, 1999.
  • All Indian Subsidiary companies must comply with the Companies Act, 2013 provisions.
  • RBI imposes several foreign exchange management compliances on Indian Subsidiary companies.
  • Indian subsidiaries must file income tax returns every year. The corporate tax rate in India is currently 25%.
  • Companies are required to file annual returns with the MCA and the Registrar of Companies.

For guidance on CIN Number, you can explore our comprehensive guide on CIN numbers.

How IndiaFilings Can Assist with Indian Subsidiary

Still unsure how to register an Indian Subsidiary? IndiaFilings simplifies the process 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 in Faridabad, you can start your Indian Subsidiary application confidently and efficiently.

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Frequently asked questions

Common questions about Establish an Indian Subsidiary in Faridabad with IndiaFilings.

To establish an Indian subsidiary in Faridabad, you need to determine the company type, obtain a Digital Signature Certificate, apply for Director Identification Numbers, and secure name approval through the MCA portal. These steps are crucial to facilitate the incorporation process.
In Faridabad, a wholly-owned subsidiary means the parent company owns 100% of the shares. Such subsidiaries can only be established in sectors that allow 100% Foreign Direct Investment, ensuring complete control by the parent entity.
A subsidiary in Faridabad must adhere to the Companies Act 2013, FEMA regulations, RBI compliances, and file annual returns with MCA. Adhering to these requirements ensures smooth operations and regulatory compliance.
Subsidiaries in Faridabad benefit from limited liability, allowing separation of personal assets from company debts. They must, however, comply with the Income Tax Act, with current corporate tax rates around 25%.
The Ministry of Corporate Affairs in Faridabad oversees the rules for company registration and compliance. Their role ensures companies follow legal requirements crucial for maintaining operational integrity.
RBI approval is critical for subsidiaries in Faridabad as it ensures adherence to foreign investment regulations. Obtaining this approval safeguards both the company's and stakeholders' interests within the regulatory framework.
IndiaFilings offers comprehensive services for setting up subsidiaries in Faridabad, including assistance with registration documents, regulatory compliance, taxation guidance, and corporate secretarial support, ensuring an efficient business setup.
Yes, a subsidiary in Faridabad can purchase or rent properties, as it is recognized as a legal entity. Ownership or rental in the company's name helps prevent conflicts and aligns with perpetual succession principles.
Faridabad offers strategic advantages such as market access, investment opportunities, and a competitive business environment. Establishing a subsidiary here can provide entry into India's dynamic market, driving business growth.
A Certificate of Incorporation in Faridabad officially confirms the establishment of a subsidiary. This document is essential for legal recognition and begins the process of setting up official business operations in India.