Indian Subsidiary

India is now most preferred country by the world startup community. Foreign companies have shown interest to start operations in India and ready to enter into the world fastest growing economy and with access of the best human resource in the world. The government of India has initiated various new regulations and policies in order to improve the environment and make doing business in India a lot easier than what it used to be before in order to facilitate registration of wholly owned subsidiary in India by foreign company.

Foreign Direct Investment of upto 100% is allowed under the automatic route in most activities/sectors in India. Investment in activities / industries where automatic route is not available can be made with the approval of the Government under the Government Approved FDI method. My Legal Route can be your legal and professional partner in India to get your New Company / Subsidiary in India started quickly and cost-effectively.

Advantages

OPERATION AND STRATEGIC CONTROL

One of the advantage is that subsidiary company gets financial support from parent company in terms of funding through share subscription money, technical knowhow, training, employees and other consultancy free of cost or at very nominal price which is very difficult for any newly established company.

EASY FUNDING

Parent company can provide continuous inflow of funds by subscribing to new shares of subsidiary company and thus save it from cost of debt. This arrangement also provides an advantage of offsetting losses from profits. This arrangement also allows joint ventures with other companies

SEPARATE LEGAL ENTITY

An organization is a lawful element and a juristic individual established under the Act. Therefore a company form of organization has wide legal capacity and can own property and also incur debts. The members (Shareholders/Directors) of an organization have no risk to the leasers of an organization for such obligations.

LIMITED LIABILITY

If a subsidiary company suffers any liability, then the liabilities and credit claims won't be passed on to the holding company, ensuring that the assets of the holding company suffer no harm in case the subsidiary is in losses. Taking the benefits into consideration, a Foreign Holding Company can opt to incorporate a Wholly Owned Subsidiary in India.

CONTINUITY OF EXISTENCE

A company, being a separate legal person, is unaffected by the death or other departure of any member but continues to be in existence irrespective of the changes in membership. A company enjoys uninterrupted existence.

BRAND VALUE

Company's brand value will get increased because employees feel secure in joining the private limited company, vendor feels secure in offering credit, investor feels secure in investing, the customer feels trust and confidence in brand in buying company product/services because of a sound corporate structure. This all makes big shape of the company and ensure an easy way for Startup Company to become a multinational company. Startup Company starts with zero revenue and rapidly reaches to multi billion dollar company in just a few years just because of high brand value of the company.

FOREIGN DIRECT INVESTMENT IN INDIA

100% Foreign Direct Investment (FDI) is allowed in several business activities/industries without any prior approval. Foreign direct investment is not allowed in Proprietorship or Partnership; LLP requires prior Government approval.

Minimum Requirements

  • Two directors
  • Two shareholders

Get Expert Assistance

    Company Registration

    Documents Required For Registration

    Identity And Address Proof

    Aadhar Card, Aadhar number is now a necessity for applying for any registration in India. Also, income tax return can only be filed if the person has linked his PAN card with Aadhar number.

    Address proof will be required for all directors and shareholders of the company to be incorporated. For Indian nationals, PAN is mandatory. For foreign nationals, apostilled or notarised copy of passport must be mandatorily submitted. Residence proof documents like bank statement or electricity bill should not be more than 2 months old.

    All documents submitted must be valid

    Registered Office Proof

    • Register office of all companies must be in India .If it is a Rented Property, Rent agreement and NOC from a landlord. If it is a Self-owned Property, Electricity bill or any other address proof.
    • Documents submitted must be valid and not more than 2 month old.

    Process

    Name Approval Application

    Name Applications Under RUN Will Be Processed By Central Registration Centre (CRC). The Name Approval Is Subject To Comprehensive Check By The Central Registration (CRC) And Thereafter Approval Or Rejection Shall Be Communicated By E-Mail To The Applicant. The Name Approved Under RUN Process For New Company Registration Is Valid For A Period Of 20 Days From The Date Of Approval. In Case Of Change Of Name Of An Existing Company, The Name Shall Be Valid For 60 Days From The Date Of Approval. RUN Company Name Application Fee Is Rs.1000.00. This Fee Is Additional To The Regular Fee To Be Paid Through SPICE Application For Company Registration. RUN Company Name Application Mandatory Process. Alternatively, The Applicant Can Apply Company Name Through The Integrated SPICE Application For Company Registration. In That Case, We Can Submit ONLY ONE Name For Seeing Approval. However, There Are TWO Changes Of Re-Submissions For SPICE Application. So, Effectively The Applicant Can Submit FOUR NAMES (1-Original Submission + 1 Re-Submissions) For Approval Without Any Extra Cost.

    DSC (Digital Signature)

    A Digital Signature Is Electronic Signature, Which Is In The Form Of Codes. It Is Used For Signing The Electronic Forms, Filed With ROC For Incorporation Of Company. Digital Signature Cannot Be Used In Physical Documents. The Company Registration In Procedure Is Completely Online And Hence It Requires Digital Signature To Incorporate A Company. It Is Mandatory For Subscribers And Directors To Have A Valid DSC (Class II Or III). You Can Get A DSC From Us In Just One Day. If You Already Have A Digital Signature, Then You Can Use The Same But Check For Its Validity Since Agencies Issues DSC’s With Either One Or Two-Year Validity.

    Apply For Din (Director Identification Number)

    Director Identification Number Is A Unique Number Which Is Given To Existing Directors Of Incorporated Companies.
    Rule 2(D) Of Companies (Appointment And Qualification Of Directors)Rule 2014 Defines Director Identification Number As An Identification Number Which Is Allotted By The Central Government To Any Individual, Intending To Be Appointed As Director Or To Any Existing Director Of A Company For The Purposes Of Identifying As A Director Of A Company.
    The Following Points Are The Purpose Of Using DIN

    • It’s A Unique Identification Number.
    • The Entire Database Of The Director Can Be Found Using DIN
    • The Name Of The Director, Address And PAN Number Can Be Found.
    • The Past Companies In Which He Had Worked And Present Company In Which He Is Working Can Be Found.
    • Once Obtained DIN Number, The Director Can Use The Same For Life Irrespective Of The Company He Works In. A Change In The Company Doesn’t Change The Director Identification Number.

     

     

    Form Spice (Inc-32) Moa (Inc-33), Aoa (Inc-34), Agile

    Form INC-32 Must Be Accompanied By Supporting Documents Including Details Of Directors & Subscribers, Affidavits, Declarations, Identity Proof, Address Proof, MoA And AoA Etc. Once The EForm Is Filed, Its Processed By The MCA’s Central Processing Centre.
    If Found Complete Company Would Be Registered And CIN Would Be Allocated. Also DINs Gets Issued To The Proposed Directors Who Do Not Have A Valid DIN. Maximum Three Directors Are Allowed For Using This Integrated Form For Filing Application Of Allotment Of DIN While Incorporating A Company. Once All The 4 Forms Ready With The Applicant, Upload All Three Documents As Linked Form On MCA Website And Make The Payment Of The Same.

    • In Respect Of Non-Individual First Subscribers Who Are Based Outside India, Pdf Attachments Of Apostilled MOA And AOA Shall Be Attached With SPICe (INC-32).
    • SPICe AoA (INC-34) Has Facility For Adding, Modifying, And Deleting Articles. Thus If Additional Article Is Required, We May Add The Same
    • DSC Is Mandatory For All Subscribers And Witnesses In EMoA (INC-33) And EAoA (INC-34). EMoA And EAoA Shall Be Used Only Where The Maximum Number Of Subscribers Do Not Exceed 7. In Case The Numbers Of Subscribers Are More Than 7, MoA And AoA Shall Be Attached Manually To SPICe And DSC Is Not Mandatory In Such Cases.
    • Two Resubmissions Are Only Permitted In The E-Form
    • SPICe EMoA And EAoA Have To Be Uploaded As ‘Linked Forms’ To SPICe (INC-32).
    • The Ministry Of Corporate Affairs (MCA) Has Notified An E-Form Known As AGILE – Application For Registration Of The Goods And Services Tax Identification Number (GSTIN), Employees’ State Insurance Corporation (ESIC) Registration And Employees Provident Fund Organization (EPFO) Registration.
    • GSTIN Application Via E-Form AGILE And Mandatory To File INC-35 While Submitting SPICe Form.
    • It Is Mandatory To Apply For PAN And TAN For The Proposed Company Along With SPICe Form.

     

     

    Certificate Of Incorporation

    Incorporation Certificate Shall Be Generating With CIN, PAN & TAN. Company Has To Pay The Stamp Duty Irrespective Of The Capital Because Stamp Duty Is State Matter. Companies Act, Has Given Exemptions For The ROC Fees Not For The Stamp Duty With Authorized Capital Of Rs. 10 Lakh Or Below.

     

    Pan & Tan Application

    Once You Receive The Certificate Of Incorporation Apply For PAN And TAN As They Would Be Required For Opening A Bank Account. You Can Also Apply For The Same Along With INC-32 At The Time Of Incorporation.

     

    Commencement Of Business (Inc-20a)

    EForm INC-20A (Declaration For Commencement Of Business) Is Required To Be Filed Pursuant To Pursuant To Section 10A(1)(A) Of The Companies Act, 2013 And Rule 23A Of The Companies (Incorporation) Rules, 2014.
    As Per New Section Inserted After Section 10 Of The Companies Act 2013, Section 10A Says A Company Incorporated, Having Share Capital Shall Not Commence Its Business Or Exercise Any Borrowing Powers Unless A Declaration Is Filed By The Directors Within 180 Days From Date Of Incorporation Of Company. The Registrar Of Companies That ‘Every Subscriber To The MOA Has Paid The Value Of The Shares Agreed To Be Taken By Him On The Date Of Making Of Such Declaration”

    FREQUENTLY ASKED QUESTIONS

    Till the time investment decisions are not firm, business in India can be done by appointing an agent, distributor in India or directly providing services from abroad.
    Such arrangements are subject to applicable tax withholding rules in India. The payment from India is governed by rules of Foreign Exchange Management Act (FEMA) and controlled by Reserve bank of India (RBI)

    Initial approval of a LO is granted by Reserve Bank of India for 3 years. Subsequent request for an extension is generally approved for next 3 years. Further extensions can again be applied, however approval by Reserve Bank of India (RBI), is granted on a case to case basis

     

    There is a requirement to appoint an Authorized Representative of an LO. He/She can be a resident of India or US. An Authorized Representative can be changed at the will of the Board of Parent Company. The person however must have an Indian Permanent Account Number (PAN). PAN is a unique number, obtained by registering at Indian Income Tax.

     

    BO can be opened with a prior approval from RBI and it’s regarded as Foreign Company in India. As it’s not a separate entity from its parent company, all business risk and liabilities are directly assumed by the Parent company. It can conduct full fledged business activities in India, except Manufacturing. It can however subtract such activities to Indian vendors. BO, being a foreign company taxed at a higher rate (presently 40%).

     

    You don’t need to incorporate. In case you have awarded a specific contract in India, you can set up a PO without prior approval of Reserve Bank of India. After completion for the project the net of tax, proceeds can be repatriated to the Parent Company.

     

    Most of the business sectors don’t require a prior approval and 100% FDI is permissible. In all such cases, only reporting is required to RBI, within 30 days of receipt of equity/allotment of shares. Where ever automatic route is not available i.e. sectors which has a cap on FDI, prior approval from Foreign Investment Promotion Board (FIPB) is required e.g Whole Sale Trading.

     

    Recently the requirement of Minimum Share capital (Private Limited- INR100K, Public Limited- INR500K) is being lifted by Indian Government. There is however requirement of minimum 2 Shareholders & 2 Directors (at least 1 to be resident director). There is also a provision of One Person Company (OPC), however it is allowed only to a resident Indian.

     

    An address to be termed as a “Registered Office’ is required. Commercial or business address can be at a different location. There is no requirement of any minimum area, location etc. A business incorporated at any place in India, can do business throughout India. State Government however may require some local registrations.

     

    Initial funding can be done though injecting share capital i.e. FDI. A loan from parent company (External Commercial Borrowing- ECB) is permissible only for Capex. ECB for working capital is permitted subject to certain conditions and a lock in period of seven years for capital repatriation. Local financing is always available subject to required collaterals.

     

    No, taxability in India arises based on residential status in India and incomes accrue or arise in India. A Director is however is liable for any negligence or any wrong doing on behalf of the PLC, as he/she is termed as a Key Managerial Person (KMP).

     

    India has a federal system of levying tax on businesses. Income Tax, Service Tax, Customs Duty etc. are levied & collected by Central Government, however Value Added Tax, Local Body Tax, Municipal Taxes, etc are state subjects.