Indian Subsidiary
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Foreign Company in India
With 100% FDI becoming a possibility in most sectors in India, its the best time for an overseas / foreign company to set up their business in India. In fact, you can set up a business in India even if you do not have a company overseas. This has encouraged a lot of companies overseas to set up their business in India. Any overseas company setting up their operations in India is popularly called a “Foreign Company”.
The foreign entity / business can hold the entire control of the company and it is governed by Companies Act, 2013. The only requirement is to have on resident director and a local address for operating the business.
ADVANTAGES
Advantages of foreign company registration in India
When a foreign company is registered in India, it establishes a presence in one of the world’s largest consumer markets and a fast growing industrial and manufacturing hub. Since it’s a separate legal entity, it does a separate identity as well.
As a private limited company structure, this is the most suitable option for foreign entities. The regulations are clear and the norms are liberal. The registration process is much simpler and can be completely handled online.
It’s mandatory for every foreign company registered in India to have a resident Indian director. However, the foreign entity or shareholder can have complete control over its operations while benefitting from having a local resident director.
Its logical for foreign companies to establish their business in India and expand into territories with a long-term opportunity. Having a limited liability company structure gives a lot of advantages to the foreign entity Specially while entering new markets.
ONLINE REGISTRATION
Documents required to register an Indian Subsidiary
THE PROCEDURE
India Subsidiary of Foreign Company
There are a series of steps before the company formation is completed. They are listed below for easy reference. The entire procedure takes 10 to 12 working days to complete (Based on standard government processing time).
- Check Name Availability
- Name reservation process.
- Application for Digital Signature Certificate (DSC)
- Drafting of MoA, AoA & other required documents
- Notarizing documents along with Stamp Duty payment
- Filing application for company registration
- Application for DIN Allotment
- Application for PAN and TAN of company
- Certificate of Incorporation
FREQUENTLY ASKED QUESTIONS
Explore India Subsidiary of Foreign Company
What are the minimum requirements to set-up an Indian subsidiary?
The company structure for an Indian Subsidiary is a Private Limited Company. The requirements as listed below:
- Minimum 2 directors with one being a resident Indian.
- Minimum 2 shareholders are required & the same individual can be a shareholder and director.
- A registered office address in India to receive any formal communication.
What are the FDI Guidelines for Foreign Nationals in a Private Limited Company?
Under the automatic route defined by the government of India, 100% Foreign Direct Investment is allowed in many of the industries. Under this, only a post-investment filing is necessary with the RBI indicating the nature of investment made. Some industries require prior approval from the RBI, ad such cases, the approval must be sought before the investment in the company.
Which are business categories in which foreign nationals or companies can’t invest?
The business categories in which a foreign entity or individual cannot directly engage is listed below:
- Chit Fund Business
- Nidhi Company
- Agricultural or plantation activities (excluding floriculture, horticulture, development of seeds, animal husbandry, pisciculture, cultivation of vegetables, mushrooms, etc., under controlled conditions, services related to the agro & allied sector and tea plantations); or
- Real Estate business, or construction of farmhouses (Does not include the development of townships, construction of residential/commercial premises, roads or bridges); (We can clarify when you provide exact nature of business if it falls under this category)
- Trading in Transferable Development Rights (TDRs)
Can we register a wholly owned subsidiary?
Yes. It’s possible. However, the law specifies that there should be one resident. So the parent company can subscribe to all the shares in the company and leave one share to be held by the resident Indian director.
Can we get the same name as the foreign entity?
Yes. This is based on certain procedures and most importantly subject to availability. The applicants can provide a maximum of 2 names with their preference order under the RUN form. The names provided should comply with the provisions of the Act or regulations.
Is there any minimum capital requirement?
Like any other private limited company, minimum authorised capital is Rs. 1 lakh even for a foreign company. However, the limitation of minimum paid-up capital is eliminated to simplify business registration. However, sufficient capital must be infused to ensure a running business.
Is a physical place of business required by a foreign company for setting up a business in India?
The place of business can be owned by the foreign company or can be through an agent. However, its mandatory to have a registered office address for formal communication with the company for any government authorities. Please note that place of business and registered office is distinctly different.
What else is required to be noted while registering a company in India?
As a foreign company, its mandatory to inform the RBI of the company’s source of investment through a proper filing. In sectors which don’t fall under the automatic route, an approval must be obtained from the government of India before investing funds in the company.
Can the entire process of forming the company be handled online or does it require a physical presence of any proposed director?
The entire process is online and doesn’t require any physical presence of any of the proposed directors. The submission of forms and even the signatures are digital. Its vastly simplified.
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