Indian Subsidiary
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Documents Required
- Recent Utility Bill Business Place
- Name Significance Letter
- Specimen
- Aadhaar Card
Indian Subsidiary Registration
An Indian subsidiary is a company incorporated in India that is owned or controlled by a foreign company (the parent company). The subsidiary operates as a separate legal entity but is influenced and directed by its parent company, which holds a majority stake in the subsidiary.
Key Features of an Indian Subsidiary
Separate Legal Entity: The subsidiary is a separate legal entity from the parent company, meaning it can enter into contracts, own property, and incur liabilities independently.
Majority Ownership: The foreign parent company typically holds more than 50% of the shares in the Indian subsidiary, allowing it to control the subsidiary’s decisions and operations.
Regulatory Compliance: Subject to Indian company laws and regulations under the Companies Act, 2013, as well as foreign direct investment (FDI) regulations set by the Reserve Bank of India (RBI).
Limited Liability: Shareholders (including the parent company) have limited liability, protecting their personal assets from the subsidiary’s debts and obligations.
Financial Reporting: Required to maintain its own financial records, prepare annual financial statements, and comply with Indian accounting standards and tax laws.
Advantages
- Market Access: Provides foreign companies with direct access to the Indian market, facilitating business expansion and operations in India.
- Local Presence: Establishes a local presence that can enhance customer trust and improve business relationships within the Indian market.
- Regulatory Compliance: Operates under Indian regulations, which may simplify compliance for local business operations compared to other forms of foreign investment.
- Limited Liability: Limits the parent company’s liability to the extent of its investment in the subsidiary, protecting the parent’s assets.
- Tax Benefits: May qualify for various tax benefits and incentives offered by the Indian government to encourage foreign investment.
Disdvantages
- Regulatory Compliance: Must adhere to Indian regulatory requirements, which can be complex and require extensive documentation and compliance efforts.
- FDI Restrictions: Subject to foreign direct investment (FDI) policies, which may impose restrictions or require approvals for certain business sectors.
- Tax Implications: Subject to Indian corporate tax laws, which may have implications for the repatriation of profits and overall tax liabilities.
- Operational Costs: Establishing and maintaining a subsidiary involves significant administrative and operational costs, including compliance with local laws and regulations.
- Cultural and Market Differences: Navigating cultural differences and local market dynamics may present challenges and require local expertise.
Registration Process for an Indian Subsidiary
Obtain Digital Signature Certificates (DSC): Required for directors and authorized signatories to sign electronic documents.
Obtain Director Identification Number (DIN): Required for all proposed directors.
Name Reservation: Reserve the company name through the RUN (Reserve Unique Name) service on the MCA portal.
Draft Memorandum and Articles of Association: Prepare the Memorandum of Association (MOA) and Articles of Association (AOA) in compliance with the Companies Act, 2013.
Incorporation Forms: File Form SPICe+ (INC-32) for incorporation, along with necessary attachments such as MOA, AOA, proof of identity and address, and director consent forms.
Payment of Fees: Pay the prescribed registration fees to the Registrar of Companies (ROC).
Obtain Certificate of Incorporation: Upon verification, the ROC issues the Certificate of Incorporation, which includes the company’s Corporate Identification Number (CIN).
Apply for PAN and TAN: Apply for the company’s PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number).
Commencement of Business: File a declaration for the commencement of business (Form INC-20A) within 180 days of incorporation.
Other Registrations: Depending on the business activities, obtain additional registrations such as GST, import/export licenses, or any specific industry-related licenses.
Documents Required
1. For the Foreign Parent Company:
- Certificate of Incorporation: Proof of the parent company’s incorporation or registration in its home country.
- Board Resolution: A resolution from the parent company’s board of directors authorizing the establishment of the subsidiary in India and appointing a representative.
- Memorandum and Articles of Association: Documents outlining the parent company’s objectives and governance structure.
- Proof of Address: Recent utility bill or bank statement of the parent company’s registered office.
- Director Identification Number (DIN): For directors of the Indian subsidiary (if already available).
- Passport Copies: Passports of directors and authorized signatories of the foreign parent company.
2. For the Indian Subsidiary:
- Digital Signature Certificate (DSC): Required for all proposed directors and authorized signatories.
- Director Identification Number (DIN): Required for all proposed directors.
- Name Reservation: Proposed names for the subsidiary, reserved through the RUN service on the MCA portal.
- Memorandum of Association (MOA): Drafted as per the Companies Act, 2013, detailing the subsidiary’s objectives.
- Articles of Association (AOA): Drafted as per the Companies Act, 2013, outlining the rules for the subsidiary’s governance.
- Form INC-32 (SPICe+): Application for incorporation, including details of the company, directors, and registered office.
- Proof of Registered Office Address:
- Utility bill (electricity, water, gas) not older than 2 months.
- Rent agreement (if rented) or property ownership documents.
- No Objection Certificate (NOC) from the property owner, if applicable.
- Proof of Identity and Address for Indian Directors:
- Identity Proof: PAN card, passport, voter ID, or driving license.
- Address Proof: Bank statement, utility bill (not older than 2 months), or passport.
- Form INC-9: Declaration by subscribers and directors.
- Form DIR-2: Consent to act as a director from each director.
- Passport-size Photographs: Recent passport-size photographs of all directors and subscribers.
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