Wholly Owned subsidiary

Wholly Owned Subsidiary in India

A foreign company can set up its operations in India in either unincorporated form like Branch Office, Liaison office, project office, or incorporated form, i.e. Wholly Owned subsidiary, Limited Liability Partnership, or Joint Ventures.Subsidiary

Companies are those companies in which other Indian or foreign companies hold more than 50% shares or voting rights or control. If another company holds 100% of shares, the first company becomes a wholly-owned subsidiary or another company.

A wholly-owned subsidiary in India is one of the foreign companies’ most popular forms of entity registration.

Subsidiary Company Registration in India

Some of the important points to be kept in mind during subsidiary company registration in India are as under:

  1. Any foreign citizen can become a director in a wholly-owned subsidiary company in India.
  2. Any foreign company or foreign citizen can become a shareholder of a wholly-owned subsidiary in India.
  3. At least one Director should be an Indian citizen and Indian Resident.
  4. There is no minimum amount of authorized and paid-up capital required for subsidiary company registration in India.
  5. Local office address would be required for showing registered office.
  6. Every year, at least 4 Board meetings and one shareholder meeting shall be held in India.
  7. Incorporation of an Indian subsidiary company generally does not require any approval from RBI or other regulatory authorities unless and until the nature of business of the proposed company falls under the government approval route. However, on receipt of share subscription money, RBI and ROC need to be intimated.

Other points to be kept in mind after registration of Indian subsidiary

After subsidiary company registration in India, the Indian subsidiary need to do the following further things:The amount received from foreign shareholders would be considered as FDI in India.

  1. Indian subsidiary needs to open a current account in Bank. All the shareholders need to bring share subscription money in a bank account in a proportion of their shareholding.
  2. The company must do RBI compliance relating to the receipt of share subscription money in an Indian bank account from shareholders by filing relevant online forms with RBI.
  3. Before commencement of business operations, the Indian subsidiary needs to apply for GST registration and Import Export Code if engaged in import and export business.
  4. It shall hold a board meeting and make an appointment of first auditors within 30 days of incorporation
  5. It shall apply for a business commencement certificate within 180 days of incorporation.

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  • One Window Solution for Pre-Incorporation and Post Incorporation compliance.
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  • Existing clients from the USA, UK, Netherland, Italy, China, Taiwan and growing.

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    How to register wholly owned subsidiary company in India | Doing Business 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:

    1. Number of Directors and shareholders required for Incorporation of subsidiary of foreign company in India
    2. Nominee Shareholders required for holding shares in wholly owned subsidiary company in India
    3. Amount of authorized and Paid up share capital required for registration of wholly owned subsidiary company in India

    1). Number of Directors and shareholders required for Incorporation of subsidiary of foreign company in India.

    • Legally, 2 directors are required for incorporation of subsidiary of foreign company in India 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

    2). Nominee Shareholders required for holding shares in wholly owned subsidiary in India.

    • Since foreign company would be shareholder, therefore, it has to appoint one person as authorized signatory [Nominee Shareholder] who would subscribe shares of wholly owned subsidiary in India 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.

    3) Amount of authorized and Paid up share capital required for incorporation of foreign 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.

    Therefore, if a parent company opts for incorporation of subsidiary company4 individuals will be required. 2 Indian Directors, 1 foreign Director, 1 authorized person [nominee shareholder] who will hold 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 incorporation of wholly owned subsidiary company  in India.

    Advantages of Wholly-Owned Subsidiary (WOS):

    Starting a wholly-owned subsidiary can be very lucrative for companies and businessman. Due to its many of the advantages it can be a viable option for the following reasons-

    • Although it is owned by a parent company but a wholly-owned subsidiary is considered as a separate legal identity and has its own management.
    • The time consumption in the process of registration is less for a WOS.
    • It requires less investment to register this form of a company as compared to other forms.
    • A WOS is easy to handle whether it is in terms of finances or in terms of operations. It is easy to manage this type of company.
    • Since a WOS already has a parent company, the financial issues of the same can be managed with the financial resources of the parent company.
    • The parent company of the WOS partially or fully supports its operational commitments.
    • The risk management of this type of company can be managed easily with the help of the investments made in the research and development sector.
    • It also gets benefitted from the expert knowledge and guidance from the parent company and its field experts.