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Foreign Subsidiary Company Incorporation

Looking to expand and grow your business beyond its present expanse? Start with incorporating a subsidiary. Our experts can help you with this process for a hassle-free incorporation. In cases where a parent company owns a foreign subsidiary, the subsidiary must follow the laws of the country where it is incorporated and operates. Hence, if a foreign subsidiary is incorporated in India, then it has to follow the applicable laws in India.

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

How to incorporate a Foreign Subsidiary in India?

Selecting the type of Company-

According to FEMA guidelines, Foreign Direct Investment (FDI) is not allowed in case of Proprietorship, Partnership Firm and One Person Company. Though investment in LLP’s is allowed, but it requires prior approval of the RBI.

Hence, the easiest and fastest way set up a business in India by NRI’s and Foreign Nationals/entities is through 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.

Trademark Required?

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

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Procedure for Foreign Company Registration:

Step 1. Obtaining DSC and DIN-

The first step towards Foreign Company Registration 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)

Step 3. Incorporation Application:

This is the final step in the Foreign Company Registration 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:


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 compliances:


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 compliances 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.

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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.

Buy Now
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.

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 companies registered in India are required to maintain various additional compliance under the Companies Act, 2013.

Form FC-1

Foreign 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 company 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 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.

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

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

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. 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 compliances?

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

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. 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.

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.