Simplifying Registration of Subsidiary of a Foreign Company in India
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Clear Facts on Subsidiary of a Foreign Company
A foreign company planning to set up business operations in India may:
Incorporate a company under the Companies Act, 2013, as a Joint Venture or a Wholly Owned Subsidiary. Set up 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.
As Per Section 2 (42) of the Companies Act, 2013. A foreign company is a company or corporate body incorporated outside India which has a place of business in India, whether by itself or through an agent, physically or electronically. It conducts any business activity in India in any other manner.
When a foreign company makes 100 per cent FDI (Foreign Direct Investment) in India through an automatic route, the Indian company becomes the Wholly Owned Subsidiary Company of that Foreign Company. Let’s say ABC Inc. USA owns 100 per cent shares in XYZ Pvt. Ltd. Then XYZ Pvt. Ltd. becomes the Subsidiary Company.
Important Features
- Wholly owned Subsidiary is regulated by Indian Law; Companies Act, 2013.
- 100% FDI is permitted no prior approval of the Reserve Bank of India (RBI) is needed.
- It is treated as a domestic company under Income Tax Law and is eligible for all exemptions, deductions, and benefits as applicable to any other Indian Company.
- Funding can be made in the form of Share Capital and Loans.
Benefits of a Subsidiary of a Foreign Company
Limited Liability
A private limited company provides limited liability protection to its shareholders. In case of any unforeseen liabilities, it would be limited to the company and not impact the shareholders.
Separate Legal Entity
Private limited company is recognised as a separate entity legally with perpetual existence. It has PAN number, bank accounts, licenses, approvals, contracts, assets and liabilities in its unique name.
Perpetual Succession
The Private limited company that is once registered keeps on existing in the eyes of the law even in the case of death, bankruptcy, or insolvency of any of the members. The life of the company keeps on existing forever.
Expansion
Here, the scope of expansion is higher as it is easy to raise capital from a venture capitalist, a financial institution, or angel investors, and the advantages of limited liability.
Greater Credibility
The Registrar of Companies must receive a lot of information from private limited companies about their structure, operations, and finances. Public domain. Thus, vendors, lenders, and employees can find company information like authorised capital, directors, registered office, etc. Businesses with this information are more credible.
Better Governance
Private limited companies are better at creating value because the Companies Act 2013 requires them to follow strict procedures, disclose norms, and comply with legal requirements. To avoid issues, experts should register a private limited company.
Brand Value
The Private Limited Company's brand value increases as employees feel safe joining, vendors feel safe lending, and investors feel safe investing. Due to their high brand value, newer startups can become multibillion-dollar companies.
Foreign Direct Investment
Several industries and business activities allow 100% foreign direct investment without prior approval. In proprietorships and partnerships, FDI is prohibited. FDI in a Limited Liability Partnership also needs government approval.
Borrowing Capacity
Indian private limited companies can borrow more than LLPs because they have more debt options. Since debenture issues and convertible debentures are always available, banks help private limited companies more than OPCs and LLPs. Banks prefer private limited companies over partnerships.
Subsidiary Company
Branch Office
Liason Office
Permitted Activities
All activities possible including manufacturing and trading in India, back office for IT companies or selling online in India
1- Promoting technical or financial collaborations between Indian companies and parent or overseas group company.
– Rendering technical support to the products supplied by parent/ group companies.
– Representing in India the parent company / group companies.
– Acting as a communication channel between parent company and Indian customers
Form of Incorporation
Private Limited Company
Branch office
Liason Office
Minimum Requirements
2 Shareholders ( all can be foreign nationals)
2 Directors ( at least 1 should be Indian resident)
A Indian resident to head the branch office
A Indian resident to head the liason office office
Disadvantages
No Disadvantages
Cannot provide all kind of services to its parent company and stringent requirements to setup.
Cannnot hire employees to provide services to the parent company
Form of Incorporation
This is the most suitable structure for those wanting to start a business in India
Suitable for equipment suppliers in India to provide after sales services in India
Suitable for shipping and airline companies in India
Registration Process of Subsidiary of a Foreign Company
Step 1:
Obtaining DSC
Step 2:
Apply for the DIN
Step 3:
Application for the name availability
Step 4:
Submission of MOA and AOA to register a private limited company
Step 5:
Apply for the PAN and TAN of the company
Step 6:
ROC issues a certificate of incorporation with a PAN and TAN
Step 7:
Appoint nominee director
Entire process will take 2 to 3 weeks (Approx)
Online Registration Process
Select the package that suits you.
a. list of services purchased
b. documents to be submitted or next action.
Make a payment, and you will receive your personalised dashboard login and password.
Once documentation is complete, you will be informed about the next steps through email and sms, and you can also check the current status of your request in your personalised dashboard.
If you have any questions, you can use the Helpdesk system on your dashboard to ask us, and we’ll be pleased to call you if needed.
Our Compliance Manager will check your submitted documents and contact you for any inconsistencies.
Our team will provide the necessary information at each step to ensure a seamless experience.
Key Registration Services: Tailored to Your Needs
Each Pvt Ltd has different functions and operations. Thus, registrations are needed.
MSME Registration
MSME or Udyog Aadhaar registration is to be obtained in the business’s name to establish that Pvt Ltd is registered with the Ministry of Micro, Small and Medium Enterprises.
Import Export Code
Import Export Code or IE code is obtained from the DGFT in case the Pvt Ltd business does export /import from India.
TAN Registration
TAN registration must be obtained for Pvt Ltd from the income tax department if the partnership firm is required to deduct any TDS while making any payments as per Income Tax Act 1961.
FSSAI Registration
In case Pvt Ltd is involved in the selling of food products or handling of food products, FSSAI registration must be obtained from the Food Safety and Standard Authority of India in the name of the Pvt Ltd firm.
GST Registration
GST registration must be obtained if Pvt Ltd sells goods or services that cross the GST turnover threshold limit for registration. In most states, GST registration is required for service providers having annual revenue of more than Rs 20 lakhs and in the case of traders-annual revenue of more than Rs. 40 lakhs.
Current Account
A current account can be opened for Pvt Ltd in any bank in India. We offer exclusive partnerships through which zero-balance current accounts can be opened.
Shop & Establishment License
We will register for Shop & Establishment license if needed as per the criteria.
Applicable Taxes and Annual Compliance
Statutory Auditor Appointment
Within 30 days of incorporation.
Annual Return
Companies registered in India must file MCA annual returns each year in forms AOC-4 and MGT-7 by 31st October.
Commencement of Business
The capital mentioned in the MOA [Memorandum of Association] must be deposited in a bank, and a commencement certificate must be obtained from MCA within 180 days of Incorporation.
DIN KYC
The DIN KYC procedure must be completed each year by the company's directors by 30th April.
Income Tax Filing
Companies registered in India must file income tax returns each year in Form ITR-6 by 30th September.
GST Filing
GST must be filed if registration taken.
Financial Statement Preparation
Entire process will take 7 to 10 days (Approx)
Pay as You Grow
Flexible Payment Options
We offer flexible packages to cater to your specific requirements:
Condition: Fees will be subject to change based on turnover and Income tax requirements
Frequently Asked Questions