The Subsidiary of a Foreign Company in India is either wholly or partially owned by another Foreign company. Its name is either similar to a holding company or can be different. However, its legal identity for compliance purposes is treated separately. We can get Company registration of foreign subsidiaries in India. The holding company operates in India with the same name as in foreign countries and provides funding support to subsidiary companies.  By establishing the subsidiary Company, a foreign Company would be able to expand its business beyond its country of origin’s borders. However, if looking at Company Registration In Gurgaon, It is vital to understand its meaning, compliance, and funding sources are essential for success.

Foreign subsidiary in India can be opened in two ways either as wholly-owned subsidiaries or partially-owned subsidiaries. In a wholly-owned subsidiary, the holding Company holds a 100% share of the subsidiary company, whereas in a partially-owned subsidiary, the parent company holds more than 50% share but less than 100% share. Parent Company plays a vital role in providing funding support at the initial point in time. Later on, funding support can be Parent Company or external borrowing. If anybody wants to start a new subsidiary company in India, understanding the different types of subsidiaries and their ownership structures can help you make informed decisions. 

Minimum Requirements for Company Registration of Foreign Subsidiary in India

A foreign company can establish an Indian subsidiary as either a Private Limited or a public limited. As a result, the subsidiary company registration will be subject to applicable Indian laws. Criteria to be meet will vary depending on the chosen structure. In India, there are two structures for establishing a subsidiary of foreign Company. The Requirements of this procedure must be understood to obtain success for registration of a company.

1. Number of Shareholders: For Indian private company registration, at least two shareholders are required whereas seven shareholders are required for the public limited company. However, if one wants to set up as a Public Limited Company, the minimum number of shareholders required are seven and maximum are unlimited. For private limited company shares the minimum shareholders are 2 and maximum can have up to 200 shareholders. It is critical to understand the minimum and maximum shareholder requirements for each form of corporation.
2. Maximum shares held by the parent foreign company: For company registration of subsidiary of foreign company in India, the parent can either wholly own or partially own its shares. If the parent company owns all 100% of the subsidiary’s shares, it’s a wholly owned subsidiary. However, if the parent company owns more than 50% of the subsidiary’s shares but less than 100%, it’s a partially owned subsidiary. If the parent company does hold less than 50% of share then it is not to be said as a subsidiary Company. As a result, we believe it is critical to understand the difference between completely owned and partially owned subsidiaries. It helps you choose the right structure for your Indian subsidiary firm.
3. Number of Directors: For a new registration of a company in India, there must be at least two directors. In the case of a Public Limited Company, at least seven directors must exist. Both types of business organizations have the right to host as much as 15 directors. In an Indian subsidiarity, it should affirm that all the minimum and maximum requirements in terms of the directors are satisfied.
4. One Resident Director: Directors of an Indian subsidiary may be of Indian or international origin. However, it is critical to have one India director.
5. Registered Office in India: The subsidiary company of a foreign corporation needs to have a registered office through which the company shall be operated lawfully in India. The registered office is the official address of the company for receiving all legal and official communications. The location of the registered office will determine the jurisdiction of courts and government agencies like various tax authorities over the company. It is also necessary to obtain the necessary approvals and registrations from the concerned authorities before starting the office under the Company name. Failure to comply with these requirements can lead to penalties and legal issues in the future.
6. Capital Requirement: There is a minimum capital requirement of INR 1,00,000 prescribed under the company Act in Indian. Apart from above, the capital investment can be made in loan, preference share capital or any other form. The investment at the initial point depends upon the expenditure to be done by foreign subsidiary within one year. It is imperative to understand that capital infusion must be as per guidance issued by Reserve Bank of India. It is also important to understand for what business purpose foreign company is infusing capital. It should not be a prohibited sector.

Process/Step for Company registration as Foreign Subsidiary in India

For registration of a Company as foreign subsidiary in India, we have to furnish all the documents online and no physical documentation is required. For detailed analysis, it is vital to understand the process/steps that are required to be followed

Step 1: Documentation:

Indian and Foreign Company

• Name of the Proposed company in India (2 name preference)
• Authorised share capital: Minimum capital in case of Private Company is of INR 1,00,000
• Percentage of holding by shareholder
• Brief object of the Company
• Certificate of Company Registration of foreign Company should be apostilled and notarised in foreign Company. If the certificate is not in English language, first get converted into it through an official converter.
• MOA and AOA of proposed company to be prepared, notarised and apostilled in foreign Company
• Registered address of proposed company in India along with address proof, utility bill not older than 2 months and no objection certificate from owner

Directors and authorized Signatory

• Name
• Address (Present and Permanent both)
• Phone no
• Email ID
• Educational qualifications
• Occupation
• Place of birth
• Photograph
• Period of stay at present office
• Digital Signature issued in India
• Passport of authorized signatory in case of foreign nation: Make sure to be translated in English through official converter if not in English and post that, should be notarised and apostilled in foreign Country
• Proof of residence (Bank Statement/utility bill/mobile number) of authorized subscriber not older than 2 months in case of foreign nation: Make sure to be translated in English through official converter if not in English and post that, should be notarised and apostilled in foreign Country
•  PAN/ Aadhaar/Driving license in case of Indian nation.
  

  Step 2: Draft Board Resolution and Power of Attorney

  Once all the required documents are gathered, the  next and crucial step is to draft a resolution seeking approval from the Board of Directors of foreign Company to establish and incorporate the subsidiary of foreign company in India. This resolution should be presented at the next board meeting and, once passed, it will serve as conclusive evidence that the foreign company has officially approved for the Company registration of its subsidiary. 

  Furthermore, the foreign company must write a Power of Attorney permitting someone in India to file the subsidiary’s company registration application.

  This board resolution needs to be signed by at least two directors of the Company.

  Step 3: Legalize Board Resolution for Name Approval

  For registration of a Company, make sure that the Board Resolution, which is a document originating and executed in a foreign country, is accepted in India, it needs to be apostilled and notarised in Foreign Country.

  Step 4: Choose A Nname and Request Approval

  At the time of registration, “India” can be added to the name of the parent company as a subsidiary from abroad in India. For instance, if your parent company is situated abroad as XYZ Pvt Ltd, the Indian subsidiary would be called “XYZ India Pvt Ltd”. However, there are no restrictions on having a different name. In case the parent company has a trademark registered in its name, the subsidiary company can use the same provided the parent company issues a No Objection Certificate (NOC) for this purpose.

  To reserve the chosen name, the authorized representative may submit an application for approval to the Registrar at the Central Registration Center. This can be accomplished through the RUN (Reserve Unique Name) form on the MCA Portal. In each of these applications, two names may be submitted, together with a legalized copy of the Board Resolution and a NOC from the parent business if its registered trademarks are utilized in the name of the subsidiary. If the recommended name is legally permissible, the Registrar will approve the application and hold it for the subsidiary firm.

  Step 5: Legalize the Company Registration Documents

  After preparing and validating the necessary documents, submit your company registration application via the MCA portal. These documents include the Memorandum of Association, Articles of Association, and Consent of Directors in DIR-2, among others. These documents must be meticulously drafted and tailored to the requirements of the Indian Companies Act, 2013 and also no director is able to misuse the power allotted.

  It is important to note that, like the Board Resolution, these documents will also have to be legalized in the exact same way before filing the application for name approval. This means that if the documents were originated and executed in a foreign country, they will need to be notarised and apostilled in foreign Country. This will help to avoid delays and problems throughout the company registration process.

  Step 6: Apply for Company Registration

  After preparing and validating the necessary documents, submit your application for company registration using the MCA portal. Once you’ve filled out all of the relevant information, you may upload all of the essential documents in digital format and attach the approved director’s DSC (Digital Signature Certificate). Pay the required government charge and submit your application online to the ROC.

  Step 7: Issuing A Certificate of Company Registration and CIN

  The authenticity of all the documents availed is verified by the Registrar of Companies. In case all the documents are correct or as required, the Registrar will issue a Certificate of registration of a company to the subsidiary company. This certificate will contain the Corporate Identification Number (CIN) of the company and date of incorporation of Company. The number is always unique and to be used further in all documentation and correspondence. This CIN number also became part of the letter head of the Company which is further used for all documentation.  A PAN number will be issued along with the company’s registration certificate. Now the company can begin the process of creating a bank account and Registering For GST, PF, and ESI (if applicable).

  Conclusion

  Following these procedures will let you easily Register Your Subsidiary Company In India and begin your business venture. However, the exact needs and processes may vary based on your company type and location. This article shall guide you step by step through the process of registering a subsidiary in India as smoothly and effectively as possible.