The Indian subsidiary is a private limited company with 50% ownership of a foreign parent company. It shall comply with the Rules prescribed by the Ministry of Corporate Conduct (MCA) under the Companies Act, 2013. Formation of subsidiary is a smart and favoured means for extending one’s business to foreign country of their choice. The registration procedure includes picking a corporation name, filing the required documents (memorandum of association and articles of association) and getting necessary authorizations from the Foreign Investment Promotion Board (FIPB) or the Reserve Bank of India (RBI).
A subsidiary is an entity registered in a foreign nation. For setting up a subsidiary company, parent company must own at least 50% of the subsidiary. Subsidiaries would operate as separate legal entities from the parent company, limiting the parent company's liabilities to its shares in the Indian subsidiary. Foreign companies can exercise control over business operations and decision-making in India while complying with local tax, legal and regulatory obligations. In addition, an Indian is entitled for several tax benefits and monetary incentives such as the probability of deporting profits to the parent company. With a thriving economy and large customer base, India is an attractive destination for foreign companies looking to expand.