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Foreign companies looking to enter the Indian market often opt for setting up a foreign subsidiary company in India. A foreign subsidiary company is a company that is owned by a foreign company or individual and is registered in India. If you are looking forward to setting up a Foreign Subsidiary or WOS, Compliance Calendar can help you with the requirements and process for registering a foreign subsidiary company in India.
In the present era of Indian economy where paramount importance is given to the business sectors, foreign investors are attracted by the huge market and cheap labour invest in India to expand their businesses. India is among the fastest growing economies of the world with plenty of business opportunities which make it a preferred destination for investment from NRIs, Foreign Nationals, and Foreign Companies. Among several ways to invest in this fastest-growing economy, incorporating a foreign subsidiary or wholly owned subsidiary company in India is one of the most successful and sought-after ways.
A subsidiary company is a company that is controlled, directly or indirectly, by another company i.e., its parent company or the holding company. Where a Foreign Company holds more than 50% shares or control over the company incorporated in India, the latter company is said to be the Foreign Subsidiary of the Former Company. Where the holding is 100%, it is said to be a Wholly Owned Subsidiary (WOS) 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, a foreign subsidiary company incorporated in India must follow the applicable laws in India.
Registering a foreign subsidiary company in India involves complying with various legal and regulatory requirements. However, the benefits of doing so can be significant, as it provides foreign companies with a local presence in India and access to its growing market. It is recommended that foreign companies seek the advice of experienced professionals to ensure compliance with all legal and regulatory requirements.
While Incorporating a Foreign Subsidiary Company in India, we shall adhere to the Companies Act, 2013 and FEMA Act, 1999 along with the relevant rules and regulations prescribed under these Acts.
Why registering a Foreign Subsidiary Company in India is recommended to Foreign Investors?
According to FEMA guidelines, Foreign Direct Investment (FDI) is not allowed in case of Proprietorship, Partnership Firm, and One Person Company. FDI may be done through investment in LLP, but it is subject to the approval of the RBI.
Hence, the easiest and fastest way to set up a business in India by NRI’s and Foreign Nationals/entities is through the Incorporation of a Private Limited Company.
Requirements for Registration of Foreign Subsidiary Company in India: -
Note: While Incorporating Foreign Subsidiary Company, the point that at least one director shall be a Resident in India should be taken with utmost importance. A resident of India is a person who has stayed in India for at least 182 days in the previous year. However, in the case of a newly incorporated company this requirement shall apply proportionately at the end of the financial year in which it is incorporated. [Refer Section 149(3) of Companies Act, 2013]
The documents required for Foreign Subsidiary Registration (FPO) registration in India are as follows:
Note : It is advisable to consult a legal and compliance professional for guidance on the specific documentation required for registering a foreign subsidiary company in India, as the requirements may vary depending on the type of company and other factors. You can connect with Compliance Calendar as we have depth experience in dealing with the Foreign Subsidiary Company Registration in India.
Step 1: Application for Name Reservation
Application for Name Reservation is filed in SPICe+ Part A. For filing the application, Company must choose the appropriate name for the Proposed Company.
Point to consider while selecting the Name of Company:
In case of Foreign Company using its “Trademark” following Documents/information is required:
In case where no trademark is used in Proposed name, no mandatory documents are required to be attached with the Application for name reservation. However, one may attach the detailed copy of Main Objects in attachment.
After Reservation of Company Name, it is mandatory to proceed with the filing of FORM SPICe+ Part B with the Ministry of Corporate Affairs:
Step 2: Compilation of documents
Required documents of Proposed Company:
Required documents of Indian Resident Director/Shareholder:
Apostille / Notarized documents of Foreign Directors/Shareholders and Authorized Representative of Foreign Company
STEP – 3: Preparation of Documents for Incorporation of Company
For Incorporation of Company, the following documents are required:
STEP – 4: Fill the Information in Form SPICe+ Part B
Once all the above-mentioned documents/ information is available. It is required to fill the information in the e-form “Spice+ Part B” and submit the same with certification.
STEP – 5: Filing of Form AGILE PRO
After submitting SPICE+ Part B, AGILE PRO is also required to be submitted with the MCA. All the information which are common in SPICE PART B and AGILE PRO shall be auto fill in AGILE Pro and contain the following details:
STEP – 6: Fill details of INC-9
INC-9 is a web-based form and need DSC affixation of Directors/ subscribers. It shall not be generated web-based in one situation where at least one director/ subscriber is not having DIN and PAN both.
STEP – 7: Download PDF of all the web-based forms
After filing of all web-based form i.e., Spice+, Agile Pro and INC-9. Download PDF of such forms from dashboard given link. After downloading of PDF affix DSC on all the forms accordingly including that of Professional.
STEP – 8: Filing of forms with MCA
Once all forms ready with the applicant, upload all four document as Linked form on MCA website and make the payment of the same.
STEP – 9: Certificate of Incorporation
The incorporation certificate shall be generated with CIN, PAN & TAN details over it, subject to the approval of CRC.
Registering a foreign subsidiary company in India can offer several benefits for foreign businesses looking to expand their presence in the Indian market. Here are some of the key benefits of registering a foreign subsidiary company in India:
Limited Liability: Registering a foreign subsidiary company in India provides limited liability protection to the parent company. This means that the parent company's assets will be protected in case of any legal disputes or financial losses incurred by the subsidiary company in India.
Access to the Indian Market: India is a rapidly growing market with a large population and a growing middle class. Registering a foreign subsidiary company in India can provide businesses with access to this vast market, which can help increase revenue and profitability.
Tax Benefits: Registering a foreign subsidiary company in India can provide tax benefits, including lower tax rates and tax exemptions, depending on the nature of the business and the location of the subsidiary.
Easy to Set Up: The process of setting up a foreign subsidiary company in India is relatively straightforward and can be completed within a few weeks. Additionally, the Indian government has taken several measures to simplify the process of registering a foreign subsidiary company in India.
Credibility: Registering a foreign subsidiary company in India can enhance the credibility of the parent company in the eyes of Indian customers and suppliers. This can help establish a positive reputation and build trust, which is essential for long-term success in the Indian market.
Localized Operations: Registering a foreign subsidiary company in India allows the parent company to have a localized presence in the Indian market. This can help businesses understand local market dynamics and tailor their products and services to meet the needs of Indian customers.
In conclusion, registering a foreign subsidiary company in India can provide several benefits, including limited liability protection, access to the Indian market, tax benefits, easy setup, credibility, and localized operations. However, it is essential to carefully consider the legal and regulatory environment in India and seek professional advice to ensure compliance with all applicable laws and regulations. Connect with Compliance Calendar if you have any questions regarding Foreign Subsidiary/ WOS Registration in India.
1. Appointment of First Auditor:
The company shall conduct a meeting of Board of Directors within 30 days from the date of incorporation of the company. In this meeting, company shall appoint the First Auditor of the Company, which holds such position till the conclusion of first AGM of the company. The appointed auditor shall be the Practicing Chartered Accountant or Firm having the majority of CA.
2. Issue Share Certificate to the subscribers:
The company has to issue the share certificates to the Subscribers of the MOA within 60 days from the date of Incorporation. Depending on the states, it is also mandatory to get e-stamping of share certificates.
3. INC-20A: Declaration of Commencement of Business
The newly incorporated company must file eForm INC-20A within 180 days from the date of Incorporation. For filing INC-20A with ROC, Receipt of Subscription Money from all the Subscribers to the MOA is mandatory. It should be noted that no company shall start its business operation before filing INC-20A with ROC.
4. Declaration of Registered and Beneficial owner:
It is most seen in the case of Wholly owned Foreign Subsidiary that one share of the Foreign Parent Company is held by another person as a nominee to fulfil the requirement of minimum number of shareholders. In such case the following disclosures are mandatory:
5. Declaration of Significant Beneficial owner (SBO):
As per Section 90 of the Companies Act, 2013, Every individual who is a SBO in the Reporting Company or whose Significant Beneficial ownership undergoes any changes, is required to file a declaration with the Reporting Company in FORM BEN-1 within 30 days of such acquisition or change. In turn, the Reporting company will be required to file the said disclosure to ROC in FROM BEN-2 within 30 days of receiving it from the SBO.
SBO in simple words means a person who has significant control, directly or indirectly, in the Company. In case of foreign subsidiary company, the subscriber/shareholder/owner of the Foreign Parent Company may have significant influence on the subsidiary company. In such case this disclosure is mandatory.
6. FORM FC-GPR: Reporting of allotment of Shares to Foreign Investor
The company shall report to the RBI with respect to the allotment of Shares to Foreign investors and receipt of FDI by way of investment in the equity share capital of the Indian Company. FC-GPR shall be filed within 30 days from the date of allotment of shares. For filing of FC-GPR, Company must collect Foreign Inward Remittance Certificate (FIRC) from Bank as per FDI guidelines.
7. FLA Reporting to RBI:
FLA Return is required to be filed by all the Indian Company and LLP which have received FDI (Foreign Direct Investments) and/or made FDI abroad in any of the previous years including the current year. The Due date for filing FLA Return is July 15 of next financial year.
At Compliance Calendar, we have dedicated team of Professionals who can guide you with the checklist of documents required, process involved and any other question, you may have regarding Foreign Subsidiary/ WOS Registration in India. Feel free to reach out at email@example.com or connect at 9988424211. Do not forget to read our below most frequent Frequently Asked Questions (FAQs).
A foreign subsidiary company is a company incorporated in India with a foreign company holding its majority of shares.
Yes, under the current foreign direct investment (FDI) policy, a foreign company can own 100% of the shares in a subsidiary company in India subject to some specific industry restriction. However, MGT-6 is mandatory to file in this case with the MCA.
Yes, it is mandatory to have at least one Indian resident director in a foreign subsidiary company in India as per the Indian Companies Act, 2013.
The minimum share capital required for a private limited company including foreign subsidiary company has been done away. Now, you can form a company with any capital of your choice.
The registration process for a foreign subsidiary company in India usually takes around 3-4 weeks, subject to all documents being available and government processing time
A foreign subsidiary company in India must comply with various legal and regulatory requirements, including the filing of annual returns and financial statements, conducting annual general meetings, and obtaining necessary licenses and permits.
Yes, a foreign subsidiary company in India can open a bank account in its own name after obtaining the Certificate of Incorporation. Compliance Calendar have partnered with various Global Banks where they offer seamless banking experience including issuance of KYC and FIRC in the process of FDI Reporting.
Yes, a foreign subsidiary company in India can repatriate profits to its parent company subject to compliance with applicable regulations and procedures.
The tax implications of setting up a foreign subsidiary company in India depend on various factors, such as the nature of the business, the location of the company, and the applicable tax laws. It is advisable to consult a tax professional for guidance on the specific tax implications.
Yes definitely. We have a dedicated team of professionals who can help you at each and every step of Foreign Subsidiary Registration process including FEMA Reporting and Compliance. For any query, you are welcome to reach out at firstname.lastname@example.org or connect at 9988424211 in order to book a professional consultation.