Incorporation of Wholly Owned Subsidiary in India

A foreign company can set up its operations in India in many ways like Branch Office, Liaison office, project office, etc. All these entities have a status of “Foreign Company” in India. In case the foreign company wants to operate in India, it can do in either of 2 ways, i.e., it can open either partly owned subsidiary company in India as subsidiary company or it may open wholly owned subsidiary company in India, in both situation its status would be that of an Indian company or domestic company.

Important Factors to be considered in opening up of wholly owned subsidiary company in India:
  • Any foreigner can become director in Indian wholly owned subsidiary company
  • Any foreigner or foreign company can become shareholder of Indian wholly owned subsidiary company
  • At least one Director should be Resident in India
  • There is no maximum limit on amount of authorized and paid up capital in India
  • Every year at least 4 Board meeting and at least 1 shareholder meeting shall be held in India

Incorporation of Indian Subsidiary Company involves 2 stages:

  • First Stage- Pre registration procedure
  • Second Stage- Post registration procedure

Contact us for any Query




Steps for Registration of Wholly Owned Subsidiary Company in India

PRE-REGISTRATION STEPS

Step 1: Acquiring DSC or Digital Signature Certificate

Step 2: Acquiring the DIN or Director Identification Number

Step 3: Applying for Company Name Registration

Step 4: Applying for Incorporation of company

Step 5: Issue of Certificate of Incorporation of company

Step 6: Applying for PAN and TAN of Company

POST-REGISTRATION STEPS

Since one or more Directors are a foreign citizen, any contribution to capital would be considered as FDI and accordingly, RBI compliance needs to be done by you.

Step 1: Remittance of subscription amount in India bank a/c (within 2 months of incorporation) through wire transfer from foreign country bank account to Indian bank account

Step 2: Obtaining FIRC & KYC docs from the Bank

Step 3: Reporting receipt of share application money with RBI within 30 days of receipt of funds (Advance Reporting form along with KYC & FIRC)

Step 4: Allotment of shares immediately and

Step 5: Reporting in Form FC-GPR within 30 days of date of allotment (& of course post receipt of share application money) and follow up from bank from time to time.

Step 6: Issue of share certificates

Inclusion in our package

DSC and DIN of 2 Directors
Company Stamp, PAN & TAN Registration
Company name approval certificate
Allotment of shares within prescribed time
Copy of Certificate of Incorporation
Issue of shares certiifcates
25 copies of MOA& AOA
Filing of Form FCGPR within prescribed time

Time Involved in the Process

Approx. 12-15 working days till getting Incorporation certificate

Approx. 8 working days in getting PAN/TAN

Approx. 5 working days in opening bank account

Approx. 50 to 60 days in all RBI compliances

Documents and information required for Registration

  • Name of a subscriber (holding co.) with an occupation.
  • Name of Individual subscriber
  • Name of nominee shareholder on behalf of Company
  • Required DIN of proposed directors (minimum 2) with an occupation.
  • Mobile No. & E-mail I.D and occupation of Proposed Directors/subscribers/nominee shareholder.
  • Proposed names (in order of preference) of the company.
  • The signification of the proposed name.
  • The main object of the proposed company.
  • Proposed authorized capital of the company.
  • Self-attested copy of ID Proof of proposed Directors (Voter ID/ Passport/ Driving License) of director/subscriber/nominee
  • Self-attested copy of Residential Proof of Proposed Directors/Promoters/nominee (Bank Statement/Electricity Bill/Telephone Bill/Mobile Bill) (not older than two (2) Months) of director/subscriber/nominee
  • Self-attested copy of adhaar card of director/subscriber/nominee
  • MOA, AOA & COI of foreign holding Company, attested by director of that company duly translated in English, if not in English language & Certified by Indian Consulate
  • COI of the foreign holding company attested by a director of that company duly translated in English, if not in English language & Certified by Indian Consulate.
  • Self-attested copy of PAN Card of director/subscriber/nominee, if available
  • Self-attested copy of Passport of foreign director/subscriber/nominee.

IN CASE OF FOREIGN DIRECTORS, ALL THE AFORESAID DOCUMENTS SHOULD BE NOTARIZED AND APOSTILLED OR CONSULARIZED. IN CASE DOCUMENTS ARE NOT IN ENGLISH, TRANSLATED COPY IN ENGLISH SHOULD BE NOTARIZED AND APOSTILED OR CONSULARIZED.

Things to be kept in mind while registering wholly owned subsidiary in India

Before any foreign company makes a decision for registering wholly owned subsidiary in India, it should keep following points in consideration:

➡️ Number of Directors and shareholders required for registration of Indian subsidiary company

➡️ Nominee Shareholders required for holding shares in Indian subsidiary

➡️ Amount of authorized and Paid up share capital required for registration of wholly owned subsidiary company in India

 

  • Number of Directors and shareholders required for registration of Indian subsidiary company

Legally, 2 directors are required for registering Indian subsidiary of foreign company out of which at least 1 director shall be Indian citizen and Indian Resident. However, for practical purpose, it is advisable to have at least 2 Resident Indian directors. This will facilitate holding of board meetings, passing Board resolutions etc. otherwise, each document has to be sent to foreign director for his signing etc. Also, all documents which come from foreign company need to be apostiled and notarized which will increase time and cost. Therefore, there should be at least 2 Indian Resident Directors. There can be any no. of foreign Directors

  • Nominee Shareholders required for holding shares in Indian subsidiary

Since foreign company would be shareholder, therefore, it has to appoint one person as authorized signatory [Nominee Shareholder] who would subscribe shares of Indian subsidiary company on behalf of foreign company because foreign company being non-individual cannot hold shares of its own. Indian Directors cannot become authorized signatory. It has to be new person either Indian or foreign citizen.

  • Amount of authorized and Paid up share capital required for registration of subsidiary in India

Each time parent company will subscribe shares of subsidiary company in India and send share subscription money, it will be considered as FDI and RBI compliance need to be done i.e filing of form ARF, FCGPR etc. Therefore, in order to avoid time and cost of compliance, it is advisable to have sufficient share capital while registering subsidiary company in India. You must estimate your total working capital and capital investment need in India for next 4 to 6 months and with that amount of share capital, Indian subsidiary company shall be registered. Normally, Rs 10 to 15Lac is ideal to start.

Further, it may be noted that government fees [ROC fees] is same for authorized capital between Rs 1 lac to Rs 10 lac. After Rs 10 lac, ROC fees increases. For example for Rs 15 lac capital, ROC fees is approx. Rs 55,000.

Therefore, if a parent company opts for incorporation of subsidiary company, 4 individuals will be required. 2 Indian Directors, 1 foreign Director, 1 authorized person [nominee shareholder] who will held shares on behalf of parent company.

Also, it should start company with sufficient share capital [approx. 3 to 6 months of estimated monthly expenditure in India].

In a nut shell, keeping in view aforesaid points will be very useful for subsidiary company registration in India.

 

Rating: 3.5/5. From 4 votes.
Please wait...