India Business Setup - Setting up a Subsidiary
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.
Our team of experts is here to guide you through the complexities of establishing a foreign subsidiary company in India, from understanding the legal requirements and navigating regulatory approvals to assisting with compliance and documentation.
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 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.
Types of Subsidiaries in India
In India, there are two primary categories of subsidiaries:
Requirements and Key Facts about Company Registration in India
Here are the essential elements to consider for the incorporation of foreign subsidiary in India:
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.
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.
Importance of Taxation
How to Register a Subsidiary Company in India?
Here's a step-by-step guide on how to register a subsidiary company in India:
Step 1: Determine the Type of Company
Decide on the type of company you want to establish Incorporation of foreign subsidiary in india.
Step 2: 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.
Step 3: 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).
Step 4: Name Approval
Please choose a unique name for your subsidiary company and apply for its approval through the MCA's online portal.
Step 5: 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.
Step 6: 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.
Step 7: 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 registration of the subsidiary company.
Step 8: 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.
Compliance Required
To establish a legal and valid Indian subsidiary company, compliance with specific regulations is mandatory:
- Foreign Exchange Management Act (FEMA)
- Companies Act, 2013
- Reserve Bank of India (RBI) Compliances
- Income Tax Act, 1961
- Annual Returns
- SEBI (Listing Obligations and Disclosure Regulations)
- Entry into the Indian Market:
- Foreign Direct Investment (FDI) in India:
- Perpetual Succession:
- Limited Liability:
- Scope of Diversification:
- Separate Legal Identity:
Advantages
India's competitive environment offers a plethora of investment opportunities that attract foreign entrepreneurs to establish their subsidiary companies in the country.
DI involves investments by foreign companies in Indian private companies through share subscriptions or acquisitions.
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.
Advantages
Limited liability is a significant advantage that encourages individuals to opt for company formation over other business structures.
Establishing an Indian subsidiary company provides a strategic avenue for foreign businesses to expand their operations.
According to the Companies Act, a company is recognized as a distinct legal entity separate from its shareholders and directors.
Streamline Indian Subsidiary Company Registration with Kritika Gupta and Associates
Kritika Gupta and Associates simplifies establishing an Indian subsidiary company 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.