Indian Subsidiary in Rajasthan

Setting up an Indian Subsidiary in Rajasthan 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 Indian 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 Rajasthan.

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 an Indian 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 an Indian 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. One major benefit is the entry into the Indian market. India’s competitive environment offers a plethora of investment opportunities that attract foreign entrepreneurs to establish their subsidiaries in the country. Foreign Direct Investment (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 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.
• 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.
• 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 Rajasthan.
• Separate Legal Identity: According to the Companies Act, a company is recognized as a distinct legal entity separate from its shareholders and 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.

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. The Reserve Bank of India (RBI) regulates foreign currency exchange aspects for Indian Subsidiaries, 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.
• Every company in India must have a registered address that is officially recorded in government records.
• According to the Companies Act, every Indian company must conduct at least one general meeting annually.
• It is mandatory to file three secretarial returns each year, which are handled by a company secretary.

How to Register an Indian Subsidiary?

Incorporation of an Indian Subsidiary involves several key steps and compliance requirements. Here's a step-by-step guide on how to register an Indian Subsidiary:

• Decide on the type of company you want to establish.
• Since the registration process is conducted online, you must obtain a Digital Signature Certificate (DSC) for the proposed directors of the company.
• The directors of the subsidiary company must obtain a Director Identification Number (DIN) from the Ministry of Corporate Affairs.
• Choose a unique name for your subsidiary company and apply for its approval through the MCA's online portal.
• Prepare Memorandum of Association (MoA) and Articles of Association (AoA) following the Companies Act 2013.
• Once your chosen name is approved, file the incorporation documents with the Registrar of Companies (ROC).
• Pay the necessary registration fees to the ROC based on the authorized capital of the subsidiary company.
• If all the submitted documents and information are in order, the ROC will issue a Certificate of Incorporation.
• After obtaining the CoI, apply for a Permanent Account Number and a Tax Deduction and Collection Account Number from the Income Tax Department.
• Open a bank account in the name of the Indian Subsidiary.

Once the incorporation of an Indian Subsidiary is completed, the company can commence its business operations.

Compliance Requirements for Indian Subsidiary

To establish a legal and valid Indian Subsidiary, 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 FEMA, 1999.
• Companies Act, 2013: All Indian Subsidiary companies must comply with the provisions of the Companies Act, 2013.
• 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.
• 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.

Understanding these compliance factors will ensure smooth operations and legal standing for your subsidiary in Rajasthan.

How IndiaFilings Can Assist with Indian Subsidiary

If you are still unsure how to register an Indian Subsidiary, 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. Start your Indian Subsidiary application today with the guidance of our expert team. With IndiaFilings as your partner in Rajasthan, you can initiate and grow your business confidently and efficiently.