India in the recent years has become one of the main business market and global destination for the foreign companies. A foreign legal entity can establish its business by setting up its subsidiary company in India. Depending on the capital owned by the foreign company, the prescribed legislations and mandatory statutes provide with two different types of subsidiary registration in India. These two are- a wholly owned subsidiary and a subsidiary company. This article elaborates the subsidiary company and its types in detail.
Registration requirements for Indian Subsidiary Company:
A subsidiary company is treated and considered as a separate legal entity with its own distinctive identity. They are regulated by the provisions of the Income Tax Act, 1961 and Income Tax Rules, 1962. Under the legislations of the Indian law the following are the requirements for registration of subsidiary company-
- It is necessary for the company to appoint at least two directors.
- Minimum of two shareholders must be there in the subsidiary company.
- Trading Name approval from the Registrar of Companies.
- It must apply for the Certificate of Incorporation.
- The representatives of the company are required to provide certain but necessary documents at the time of registration.
A subsidiary company is usually, registered as a Private Limited Company in India.
Procedure for registration of a Subsidiary Company:
The trading name of the company is one of the main aspects to open a subsidiary company in India. in case the subsidiary is of a foreign company, then its name must be included in the trading name for local markets along with “India” or the name of the city in India, where the organization is to be set up. The necessary steps to be followed during the registration process are as follows-
- Applying for the Digital Signature Certificate (DSC) for all the directors in the company;
- Applying for the Digital Identification Number (DIN) for all the directors appointed in the subsidiary company.
- Applying for a suitable company trade name. This is done by providing 3-4 options that are to be chosen by the Registrar of Companies (ROC).
In case an Indian company wants to incorporate its subsidiary company, it must be registered with the Registrar of Companies (ROC). It should complete all the forms and procedures that are requested by the ROC institution. This process is to be done once the Registrar has approved the trading name for the company. As this company will represent a legal entity in India, it is obliged to pay all the levied taxes as per the provisions.
Documentation requirements for the investors of Subsidiary Company:
The following documents are to be filed by the investors at the time of investing in a subsidiary company-
- Form INC 7: Application for Incorporation of Company (Other than One Person Company).
- Form DIR 12: Particulars of Appointment of Directors and Key Managerial Staff.
- Form INC 22: Notice of the Situation.
At the time of filling the above said documents the representative of the company registration is also required to provide statutory documents of the entity i.e. the Article of Association (AOA) and Memorandum of Association (MOA).