Indian Subsidiary Company Registration
Indian Subsidiary Company Registration permits foreign companies to inaugurate their presence in India as a separate legal entity. By establishing foreign subsidiary, the Indian market can enter new markets, access new consumers, and diversify its revenue streams.
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Get Support AnytimeAn Overview of The Indian Subsidiary Company Registration
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.
What are the Types of Subsidiaries in India?
India is growing at a breakneck pace as a bolt of lightning in attracting foreign investment. Many companies have been eyeing the country to establish their presence as a subsidiary company or a joint venture. There are several Indian subsidiary companies, each with its own characteristics and benefits. It is essential to choose the right type based on your business needs and goals. Suppose you are planning to establish a subsidiary company in India. In that case, it is advisable to seek advice from Corpseed, who can guide you through the process. Let us have a look at its types-
- Wholly owned subsidiary company
A wholly-owned subsidiary is owned and operated by a parent company. The subsidiary company has all the rights and controls over the parent company and participates as a supreme authority in the decision-making. No wonder foreign companies who wish to rule their operations in India adopt such a form of subsidiary company.
- Joint venture Subsidiary Company
As the name suggests, a joint venture subsidiary company is jointly operated by two or more companies forming this alliance. For Instance, these companies collaborate on various projects and rule the market together. Additionally, the ownership and control of subsidiary Companies are shared with the parent companies.
- Limited liability Partnership (LLP) for Subsidiary Company
Limited Liability Partnership (LLP) for a subsidiary company refers to a type of subsidiary company formed as a partnership. In addition, this form of subsidiary provides liability protection to its partners, which does not make them personally liable for the debts or obligations of the subsidiary company.
Unlocking Benefits of the Indian Subsidiary Company License
You might have heard about the foreign subsidiary of an Indian company & ways in which it benefits from various provisions and incentives. For Instance, a subsidiary company is a legal entity that a parent company controls. In this section, we will discuss the benefits of subsidiaries in India-
Registering an Indian subsidiary can be a strategic move for foreign companies looking to expand in India. This practice offers several benefits that can help one navigate the Indian business landscape effectively.
- Access to Indian Market: Subsidiary company registration offers direct entry to the growing Indian market, which has helped foreign businesses gain a large customer base and diversify their sources of income.
- Limited Liability: One of the most significant benefit of Indian subsidiary company registration is Limited Liability. As a separate legal entity, the liabilities of the parent company are limited to the capital of the subsidiary, which protects its assets and reduces financial risk.
- Tax Benefits: The subsidiary companies in India are entitled for tax benefits, such as deductions under several sections of the Income Tax Act, which helps in reducing the overall tax burden.
- Enhanced Credibility: Setting up a subsidiary increases the credibility of the business in the Indian market, making it easier to gain the trust of customers, suppliers, and latent partners.
- Better Control and Management: Foreign companies can exercise greater control over operations in India through a wholly-owned subsidiary, guaranteeing better management of business activities in line with worldwide standards.
- Favourable Regulatory Environment: The Indian government has introduced several measures to ease business operations, including simplified rules and incentives for foreign-owned subsidiaries, creating a conducive environment for growth.
- Flexibility in Business Operations: A subsidiary provides better flexibility in operations, allowing foreign companies to tailor their strategies to local conditions, while also aligning with the objectives of the parent company.
What are the Documents Required for Opening a Subsidiary Company in India?
Suppose you are planning to open an Indian Subsidiary company. In that case, there are several documents that you'll need to prepare and submit. These documents are necessary to comply with Indian laws and regulations and ensure your subsidiary is legally established and recognized.
The following are the required documents, which are divided into two categories & contribute to the process of filling up the application, which is as follows-
Company-related Documents
- One should provide a Memorandum of Association & Articles of Association
- The need for sufficient proof of the Address/place of business with attached documents.
- Copy of utility bills
- Copy the resolution submitted by the promoter company along with the capital layout document.
- Copy of the certificate of Incorporation to be gained from the foreign corporates.
Documents related to Directors/Shareholders
- Digital signature certificate (DSC) And Digital Identification Number (DIN) for shareholders & directors.
- Address & identity proof from directors & shareholders.
- Photographs of shareholders & directors.
- Declaration issued by Directors & shareholders.
Procedure for Foreign Subsidiary Company Registration in India
Step 1: Obtain DSC (Digital Signature Certificate)
The initial step toward Foreign Subsidiary Company Registration in India is to applying for DIN (Director’s Identification Number) and DSC (Digital Signature) of the Directors. Following documents are required in order to obtaining the DSC and DIN:
- Photo ID Proof of Business Owner: Aadhar card | Arms License | Department Id | Driving License | Freedom
- Address Proof: Aadhar card | Arms License | Department ID | Driving License | Freedom Fighter ID Card | Pan Card | Passbook | Passport | Ration Card | Voter id card
- Proof of Possession of Premises: Sale deed | Rent agreement | Electricity Bill, etc.
- Photo: Passport size photograph
Note: Documents for non-residents and foreign citizens shall be notarized by the competent authority.
Step 2: Name Application Approval
- One of the most important steps is to choose a unique and available name for the proposed Company.
Step 3: Name Application Approval
- It is the final step for Foreign Subsidiary Company Registration Process. This requires filing of the Articles of Association of the Company and Memorandum along with several other documents by the proposed directors and shareholders.
- After the Incorporation application is approved, the Registrar will issue a Certificate with a Corporate Identification Number (CIN). The TAN and PAN of the Company will be issued.
Compliance for Foreign Subsidiary of Indian Company
Foreign subsidiaries of Indian companies are obligated to the payment of various taxations and certifications, out of which the following are of importance-
- Goods & Services Tax
The Foreign subsidiary companies are subjected to acquiring goods & services tax (GST) to ensure a smooth supply of goods & services in India.
- Income tax
The foreign subsidiary companies are subjected to paying income tax or the earned profits in India. The charged tax rate on the foreign companies adds a surcharge and education cess. Also, taxes are suppressed from foreign companies on the payments made by the residents, such as royalties, dividends and interest.
- Transfer pricing regulations
The transfer pricing is carried out equally between the foreign subsidiary company and its known partners (also the parent company). Suppose the transactions are not initiated on an equal footing. In that case, the Indian authorities might step in & adjust the prices while granting the tax accordingly.
Compliances and Treatment of Share
FEMA regulates the Foreign Investments in Indian Companies and the Reserve Bank of India (RBI). In case holding enterprise invests funds in the share capital of the Indian subsidiary, this has to be followed by RBI guidelines along with compliances under Companies Act 2013.
RBI Compliances
- By the time of receipt of funds: Such transaction has to be reported to RBI in details, within 30 days of receiving funds from foreign investor(s).
- The share of the company should be allotted within 180 days from the date of receiving funds.
- On allotment of shares: On allotment of the shares, company has to report in specified form (FC-GPR) to the RBI, within 30 days from the time of issue of shares.
How Corpseed will help you?
At Corpseed, we understand the importance of having a subsidiary company registration. It is a crucial step towards expanding your business and reaching new heights of success. Our team of experts has years of experience and extensive knowledge of the procedures involved in obtaining a subsidiary company registration. We are well-versed in the legalities and regulations of the process, ensuring that your registration is completed seamlessly and efficiently. With our expertise, you can rest assured that your subsidiary company registration will be handled with the utmost care and professionalism.
So, if you are looking for a reliable and experienced team to handle your subsidiary company registration, look no further than Corpseed.
Connect With Corpseed
Connect with the Corpseed team to discuss your requirements at IVR: 7558640644 or hello@corpseed.com. It takes 20–25 minutes to discuss the requirement.
Dedicated Manager
Once you discuss the requirement, we will align a dedicated Account Manager to understand your business needs and assist throughout the process.
Real Time Update
Track the progress of your application and always know what’s in progress and what’s done.
Job Completed
Once the job is completed, you will receive registrations & certifications directly to your email ID and at your doorstep.
Frequently Asked Questions
Quick answers to common questions about this service.
Legal requirements to start an Indian Subsidiary company ?
- Minimum of two directors
- 1 lakhs shared capital
- Minimum of two shareholders
What is the minimum shareholder requirement for a parent company?
The parent company must hold at least 51% of the shares in order to control the subsidiary, although 100% ownership is allowed for foreign companies in many divisions.
Time required to establish an Indian Subsidiary company ?
Industry average is up to 45 business days but we have a track record of completing within 30-35 business days unless critical things happen in between the process.
How long does it take to register a subsidiary in India?
Usually, the process takes 2 to 3 weeks, provided all the paperwork is in order
Do I need to get a GST registeration number to run a Indian Subsidiary Company?
Yes, GST registration is mandatory
What is the validity of the registration of an Indian Subsidiary company?
A registration certificate issued by the registrar of the business is valid until you are meeting applicable rules & compliance
What are the benefits of setting up a subsidiary company in India?
Setting up a subsidiary company in India can provide several benefits, such as access to a large and growing market, lower labour costs, and favourable tax policies.
What are the legal requirements for establishing a subsidiary company in India?
To set up a subsidiary company in India, you must register with the Registrar of Companies (ROC) and obtain a certificate of Incorporation.
What are the tax implications of setting up a subsidiary company in India?
Subsidiary companies in India are subject to corporate income tax, currently set at a rate of 25%.
What are the rules and regulations for foreign investment in India?
The Foreign Exchange Management Act (FEMA) and the Reserve Bank of India (RBI) regulations govern foreign investment in India.
What are the accounting and auditing requirements for subsidiary companies in India?
Subsidiary companies in India must comply with the Companies Act, which requires them to maintain proper accounting records and undergo annual audits.
What cultural differences should be considered when doing business in India?
India has a unique culture, and business practices may differ from those in other countries. Understanding and respecting these differences is essential when doing business in India.
What is the time frame for completing the Incorporation in India as a foreign subsidiary Company?
The time frame for the completion of Incorporation in India as a foreign subsidiary company depends on various factors, ranging from-document submission to approvals from the authorities. The process could take 2-3 months.
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