TAXAJ

Foreign Subsidiary Company Registration in India

Are you planning to grow your business beyond boundaries? Start with incorporating a subsidiary. Our experts can help you with this process for hassle-free incorporation. In cases where a parent company wholly owns a foreign subsidiary, the subsidiary must follow the country's laws where it is incorporated and operates. Hence, if a foreign subsidiary is incorporated in India, it has to follow the applicable laws in India.

A subsidiary is any company with voting stock (more than 50%) controlled by another company, usually called the parent company or the holding company. In cases where a parent company owns a foreign subsidiary, the subsidiary must follow the country's laws where it is incorporated and operates. Hence, if a foreign subsidiary is incorporated in India, it has to follow the applicable laws in India.

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About This Plan

Get your subsidiary company registered in the fastest possible manner.

Created by potrace 1.15, written by Peter Selinger 2001-2017

Timeline

It usually takes 7 to 10 working days.

Services Covered
Who Should Buy
How It's Done
Documents Required
Services Covered

  • Name approval in RUN (Reserve your unique Name)
  • DSC (2 nos)
  • Filing of SPICe+ Form
  • Issue of Incorporation Certificate along with PAN and TAN
  • Includes Govt Fees & Stamp duty for Authorised Capital upto Rs. 1 Lakh except for the states of Punjab, Madhya Pradesh and Kerala
  • Excludes foreign national / Body Corporate as director or business needing RBI/SEBI approval
  • Assistance in Opening Bank Account
Who Should Buy

  • Businesses looking to expand or scale operations on higher level
  • Businesses aiming to work globally or with reputed clients
  • Businesses looking to expand or scale their operations
How It's Done

  1. DSC Application

  2. Name approval form filing

  3. Preparation of Incorporation Documents

  4. Getting those docs signed by the respective stakeholders

  5. Filing of e-Forms with ROC

  6. Receipt of Incorporation Certificate with PAN, TAN, GST, EPF, ESI & Bank Account.

Documents Required

  1. Name, Contact Number and Email Id of all the Stakeholders.

  2. Directors Identification Number, if already.

  3. Self Attested PAN, Aadhar & Passport size photo of all the Stakeholders.

  4. Apostilled Passport, Mobile Bill and other KYC docs in case of NRI Stakeholder.

  5. Latest Month Personal Bank statement of all the Stakeholders.

  6. Specimen Signatures of all Stakeholders.

  7. Few Proposed Business Names along with Objects.

  8. Latest Electricity Bill/Landline Bill of Registered Office.

  9. NOC from owner of registered office. (If Owned)

  10. Rent Agreement from Landlord. (If Rented/Leased)

  11. Brief description of main business activities of the proposed Company.

  12. Shareholding pattern (50:50 or 60:40) between the Stakeholders.

  13.  Authorised & Paid Up Share Capital of the Company.

How to incorporate a Foreign Subsidiary in India?

What is a Foreign Company?

There are the following options available for foreign company registration in India.

A foreign company planning to set up business operations in India may: 

  1. Incorporate a company under the Companies Act, 2013, as a Joint Venture or as foreign company registration in India by an Indian subsidiary.
  2. Foreign Company Incorporation in India in the form of a Liaison Office / Representative Office or a Project Office or a Branch Office of the foreign company which can undertake activities permitted under the Foreign Exchange Management (Establishment in India of Branch Office or Other Place of Business) Regulations, 2000. (Discussed In another Article)

What is a Wholly-Owned Subsidiary?

A Wholly Owned Subsidiary Company can be defined as an entity whose entire share capital is held by another Indian or foreign company. 

For Subsidiary Company registration, the following requirements must be fulfilled. 

  • There should be a minimum of 2 Directors and two shareholders in the Indian subsidiary.
  • At least one of the directors shall be an Indian Resident and Indian Citizen.
  • There should be a local Indian office address for the registered office address.
  • Foreign parent company shall hold more than 50% shares in Indian subsidiary company.
  • Directors& shareholders (subscribers) are required to apply for DSC (Digital Signature Certificate).
  • The applicant is required to apply for the company’s name reservation with ROC/MCA.
  • After obtaining name approval from ROC, an applicant is required to file a Form for Incorporation of Company along with Memorandum and Articles of Association of the Company.
  • After filing the incorporation documents, ROC fees and Stamp duty must be paid online (This is based on the company’s authorized capital).
  • After the payment of ROC fees and Stamp Duty, ROC verifies the filed documents.
  • Once ROC is satisfied, a Certificate of Incorporation (COI)is sent through email.
  • PAN & TAN of the company shall be issued simultaneously by the department by mentioning COI. ESI and P.F. registration is also granted simultaneously.

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

Once Indian subsidiary is registered, the following further actions need to be taken: 

  1. Open a current account of an Indian subsidiary in Bank and bring share subscription money from all the shareholders.
  2. Intimate RBI regarding receipt of share subscription money, which will be considered as FDI
  3. Apply for GST registration and Import Export Code
  4. Hold first board meeting and make an appointment of auditors within 30 days of incorporation
  5. Apply for a certificate of commencement of business within 180 days of incorporation.

Selecting the type of Company-

According to FEMA guidelines, Foreign Direct Investment (FDI) is not allowed in the case of Proprietorship, Partnership Firm and One Person Company. Though investment in LLP’s is allowed, it requires prior approval of the RBI. Hence, the easiest and fastest way to incorporate subsidiary of foreign company in India by NRI’s and Foreign Nationals/entities is through the incorporation of a Private Limited Company.

Minimum requirements-

Capital: There is no minimum capital required to form a Private Limited Company in India.

Directors: Minimum two directors are required to incorporate a Private Company in India. Both should be individuals and at-least one of whom should be a resident of India. (A resident of India is a person who has stayed in India for at-least 182 days in the previous year).

Shareholders: Companies Act, 2013 requires that a Private Limited Company have a minimum of two shareholders. There is no condition for residential status of shareholders.  Shareholders can be either individuals or entities or a combination of both.

Secure your Brand Name Now!

If Company has its own product or brands trademark registration application is required to be applied for securing Companies Intellectual Property.

Government Licenses

Working in India has its own sets of compliances which includes government registration & licensing depending upon the nature and industry of the company.

Procedure for Foreign Subsidiary Company Registration in India:

   Step 1. Obtaining DSC and DIN-

The first step towards incorporating subsidiary of foreign company in India is applying for the DSC (Digital Signature Certificate) and DIN (Director’s Identification Number) of the Directors. The primary documents required for obtaining the DIN and DSC are as under:

For Indian National:

1. Pan Card

2. Aadhar Card

3. Passport size Photograph

4. Mobile Number & Email Address

For Foreign National:

1. Passport Copy

2. Business Visa

3. Utility Bill (Bank Copy, Driving License, Electricity Bill)

4. Passport size Photograph

5. Phone Number & Email Address


- If their passport or Visa be in any other language other than english, than in that case it must be transcripted and english; that transcripted copy along with the original must also be apostilled by the Indian Embassy in their country (If they are not in India).


- All the documents for foreign citizens should be apostilled by the Indian Embassy in their country (If they are not in India).


- All the documents for foreign citizens should be apostilled by their own country's Embassy in India (If they are in India).

Step 2. Name Approval:

Selecting a unique and acceptable name for the proposed Company is one of the important steps in the whole Incorporation process. The name should be in consonance with the Object of the Company and should not be identical to existing entities or Undesirable by Law. For Name Approval we need to file a form called RUN (Reserve Unique Name) for incorporating subsidiary of foreign company in India

Step 3. Incorporation Application:

This is the final step in the Incorporation of Foreign Subsidiary Company in India process. It requires filing of the Memorandum and Articles of Association of the Company digitally along with various other documents duly executed by the proposed directors and shareholders.


List of Incorporation documents to be executed:

👉 Subscriber sheet of Articles of Association

👉 Subscriber sheet of Memorandum of Association

👉 Declaration by Director in form DIR 2

👉 Declaration of Director in Form INC 9

Generally, the incorporation documents are required to be self-attested by Indian Nationals. However, in case of Foreign Nationals, the process is as under for Incorporation of Foreign Subsidiary Company in India:


In the documents are signed outside India, then the  same have to be notarized by a Public notary of the residence country and consularized or apostilled by the competent authority, as the case may be. If the documents are signed in India, then copy of Visa and stamped passport, proving his/her presence in India at the time of signing is required.

If the subscriber is a foreign entity, then the Incorporation documents should be signed by the representative of the foreign entity. An Authorization Letter duly stating the name of the Authorized Person and the number of shares subscribed should be notarized, consularized or apostilled, as the case may be in the home country of the subscriber company. Once the Incorporation application is approved, the Registrar would issue a Certificate with a Corporate Identification Number (CIN). The PAN and TAN of the Company would also be allotted simultaneously.

Treatment of Share Capital invested by the Holding Company and required compliance:


Foreign Investments in Indian Companies are regulated by FEMA Guidelines and the Reserve Bank of India. Whenever the holding company invests funds in the share capital of the Indian subsidiary, it has to follow RBI guidelines along with compliance under Companies Act 2013.

RBI Compliances:


A two-stage reporting procedure is to be followed when a company is raising funds from a foreign investor:

👉 On receipt of funds: The Company has to provide details in an “Advance Reporting Form” to the RBI within 30 days of receiving funds from foreign investor(s).

👉  The company has to issue shares within 180 days from the date of receiving funds.

👉  On allotment of shares: The company has to report in specified form (FC-GPR) to the RBI, within 30 days from the date of issue of shares along with:


– A Certificate from the Company Secretary certifying that the company has complied with the procedure for issue of shares as laid down under the Foreign Direct Investment (FDI) Scheme, and,


– A Certificate from a Chartered Accountant indicating the manner of arriving at the price of the shares issued to the foreign investors. Apart from the above, Annual return on Foreign Liabilities and Assets is required to be submitted reporting all the investments received during the year.

Foreign Company Registration in India – In the form of the Branch office, Liaison Office, and Project Office.

LIAISON OFFICE- LO

A foreign company can open a Liaison office (L.O.) if it wants to do water testing in India. L.O. can only act as a communication channel between a parent company and Indian customers, and it can do liaising in India without any authority to conclude contracts. It cannot do any business activities in India.

Conditions required for setting up L.O.

  1. Foreign company must have a profit-making track record immediately preceding three financial years in the home country.
  2. Net worth of a foreign company should not be less than USD 50,000 or its equivalent.

Approvals Required 

For setting up L.O., Prior approval of Reserve Bank of India and A.D. Banker is required. Also, after incorporation, ROC needs to be intimated. 

  1. BRANCH OFFICE

Activities Allowed

  1. The branch office is allowed to do permissible business activities prescribed by RBI. 
  2. Normally, B.O.’s are open by a foreign company in India when it is already engaged in business in its home country and wants to undertake such business activities in India. 
  3. Bos are allowed to do the following activities by RBI.
    • Rendering professional or consultancy services. 
    • Representing the parent company in India & acting as buying/selling agent in India
    • Export/ Import of goods ( only on a wholesale basis)
    • Carrying out research work in areas in which the parent company is engaged
    • Rendering technical support to the products supplied by parent/group companies
    • Rendering services in Information Technology and Development of software in India
    • Representing a foreign shipping company and Airline

What activities cannot be done by B.O.?

Bos cannot do the following activities in India: 

  • Construction Development activities
  • Manufacturing and Processing
  • Retail Trading

Conditions required for setting up B.O.

  1. A foreign company must be having a profit-making track record during the immediately preceding five financial years in the home country.
  2. The net worth of a foreign company should not be less than USD 100,000 or its equivalent.
  3. If foreign banks want to open B.O. in India, DBOD, RBI, prior approval is required.

Legal status

Bos are an extended arm of the parent company. Therefore, legal status is a foreign company in India.

Approvals Required

For setting up BO/PO, Prior approval of the Reserve Bank of India and A.D. Banker is required. Also, after incorporation, ROC needs to be intimated. 

  1. PROJECT OFFICE (P.O.)

Activities allowed 

  1. Project Office (P.O.) is established for a particular purpose and a limited period until that project continues. Normally, when a foreign company secures a project from an Indian company, then to carry out such a project. It is similar to B.O. but for a specific project.
  2. APO cannot carry out any other activity other than incidental to or related to the project.

 Legal Status 

P.O.s are the extended arm of the parent company. Therefore, legal status is a foreign company in India.

Approvals Required

  1. For setting up P.O., Prior approval of Reserve Bank of India and A.D. Banker is required. Also, after incorporation, ROC needs to be intimated.
  1. However, if the following conditions are fulfilled, no prior approval of RBI is required to establish P.O. in India.

Condition1– Foreign entity has secured a project from an Indian company; AND

Condition 2– An appropriate authority has cleared the project; AND

Condition 3– The project is funded directly by inward remittance from abroad; OR

The project is funded by a bilateral or multilateral International Financing Agency; OR 

A company or entity in India awarding the contract has been granted a Term Loan by a Public Financial Institution or a bank in India for the project. 

If the above criteria are not met, the foreign entity has to approach the RBI for approval.

  1. In case P.O. need to be set up by foreign Non-Government Organizations/ Non-Profit Organizations/ Foreign Government Bodies/ Departments, then such approval will fall under the government approval route, and such P.O.s are required to apply to the Reserve Bank for prior permission to establish an office in India, 

Thus, the above shows that there are many options available for foreign company registration in India. Depending upon the actual need of the foreign enterprise, an entry strategy can be designed and planned.

We, at TAXAJ, provide complete handholding in foreign company registration in India, whether it is in the form of subsidiary company registration or a Branch office or a Liaison office or any other entry strategy.

Secretarial Compliance

Preparing the directors’ disclosures of interest in other concerns Preparing the declarations from the directors;

Drafting of Board’s report Drafting of Annual return;

Obtaining the financials from Auditor; Email ID of all the proposed directors:

Drafting the minutes for the pre-AGM board meeting. Drafting of Director Report, Annual return and financials. Auditor’s reappointment Document has to be prepared;

Preparation of Fresh Appointment letters to Auditors if any;

Preparation of Annual General Meeting Minutes and related documents;

Preparation and filing of the balance sheet; P&L and Auditors appointment, with the RoC; Filling of AOC 4 , ADT 1 , MGT 7 with their respective attachments.

Statutory Auditing of the Company/LLP up to 300 transaction or 10 Lakhs turnover whichever is earlier.

   Q. What are the Foreign Company Compliance in India?

Foreign Subsidiary Company Registered in India are required to maintain various additional compliance under the Companies Act, 2013.

Form FC-1

Foreign Subsidiary Companies registered in India are required to file Form FC-1 within a period of thirty days of the establishment of its place of business in India. The application must be supported with an attested copy of approval from the Reserve Bank of India under the terms of Foreign Exchange Management Act or Regulations, and too from other regulators, if any, sanction is necessary.

Financial Statements

All foreign companies registered in India are required to organise financial statement of its Indian business operations in an agreement with Schedule III of the Companies Act, 2013. Thus foreign companies are required to furnish the following information/statements together with the financial statements of the company to be filed with the Registrar of Companies:

Statement of associated party transaction

Statement of transfer of funds (including dividends if any) which shall, in the relation of any fund transfer between the place of business of the foreign company in India and any other related party of the foreign company

Statement of repatriation of profits

The documents that are referred to above in this rule must be delivered to the Registrar of Companies within a period of six months from the end of the financial year of the foreign company.

Audit of Accounts of Foreign Company

All foreign companies must get its accounts, pertaining to the Indian business operations organised in agreement with the necessities of clause (a) of sub-section (1) of section 381 and rule 4 and audited by a practicing Chartered Accountant in India.

Form FC-3

All foreign companies are required to file with the Registrar of Companies, Form FC-3 detailing the list of places of business of the foreign company along with the financial statements of the company.

Annual Returns

The foreign subsidiaries company registered in India must prepare and file the annual return of the company in Form FC-4 within a period of sixty days from the final day of its financial year. Any document which should be delivered from a foreign company can be delivered to the Registrar of Companies with jurisdiction over New Delhi.

Authentication of translated documents

All foreign subsidiary companies registered in India must get its accounts, pertaining to the Indian business operations organised in agreement with the necessities of clause (a) of sub-section (1) of section 381 and rule 4 and audited by a practicing Chartered Accountant in India.

F.A.Q.

Q. How many directors are required to register a Foreign Subsidiary company?

Minimum of 2 directors are required to register a private limited company. Out of which one director who has stayed in India for total period of not less than 182 days in the previous calendar year (Indian resident).

Q. How long will it takes for the entire registration process to complete?

It depends on the documents provided by you and the Registrar of Companies approval process. It normally takes about 7 to 10 working days.

Q. Should there be a registered office address in India?

In order to register the company, you need to provide us with a local address proof i.e. Proper electricity Bill where the company is proposed to be registered. We would also need a Valid rent agreement or No Objection Letter from the owner of the premise.

Q. Will i get a legal representative also to run and manage that Foreign Subsidiary company?

Absolutely, you will have your representative of choice, who will act as a representative of yours.

Q. Who can be the promoter/shareholder of the wholly owned subsidiary?

There must be a minimum of 2 shareholders to incorporate the company.

Q. Do I have to submit physical documents?

Yes. You can either visit our office during working hours or send the documents via courier to our office.

Q. Will you also help in regulatory compliance?

Yes, Team Taxaj will also assist you with accounting, tax filing and regulatory compliance. The fee for these services depends on the requirements and is on case to case basis.

Q. Can you arrange some sort of address to register a Foreign Subsidiary company?

Yes, of course! At Taxaj we have fully functional Plug & Play Co working office located in Heart of Delhi. Most of our clients boast of a Multi City presence on the basis of Our Virtual office. Here you will get a dedicated receptionist, who will answer to every call that you will get, will receive the mails and parcels from banks and other agencies. will arrange a board room and a conference room , if you or any of the executive plan to drop by sometime.