Registering a Foreign subsidiary company involves the process of establishing a separate legal entity that is controlled and owned by another company, known as the parent company based at outside India.

Overview:

Foreign Company in India - A "foreign subsidiary Company" in India refers to a Company that is incorporated in India and is a subsidiary of a "Foreign Parent Company". It can establish businesses for trading, manufacturing, IT, any goods or services in India. The foreign parent Company holds a controlling stake in the Indian subsidiary Company and typically directs its management and operations.

The subsidiary Company registered in India operates as an independent entity under Indian laws and regulations, and is responsible for its own financial and legal obligations. Foreign subsidiary companies are commonly established in India for the purpose of expanding the foreign parent Company's business operations in the Indian market.

The subsidiary Company registered in India, can use the name of the holding Company in foreign with the addition of the word ‘India’ or any name of Indian state or city of the registered office being situated at.

Documents Process-

In order to streamline the process of registering a foreign subsidiary Company in India, one must look into the requirements before making an application with the Ministry of Corporate Affairs (MCA).

The following formalities and documents are typically required for registering a foreign subsidiary Company in India:

Pre-formalities in check:

Authorized share capital
Paid up capital and face value of each share
Number of members (shareholders) and Directors
Mail Id and contact number of all Directors/Promoters
PAN, ID and Address Proof of all Directors/Promoters
Registered office address like Utility bills (not older than 2 months)

Note: All KYC pertaining to Foreign Nationals/NRI/Body NRIs, or bodies corporate shall be duly Notarized and apostilled in the country of origin of the foreign parent company.

Incorporation Forms:

Web based Application for reservation of Company name in Spice Part-A
Web based Application for Registration of Company in Spice Part-B
Physical copy Memorandum of Association (MoA -INC-33)-Foreign Nationals
Physical Copy of Articles of Association (AoA-INC-34)-Foreign Nationals
Web based Form INC-9 web based form for all Subscribers to MOA
Web based Agile-Pro-S (EPFO, Professional Ta, GST, Current Account etc.)

Note: The physical copies of MoA and AoA shall be prepared and duly apostilled in the country of origin of foreign parent company.

Documents of Directors, Authorised Signatory and Nominee shareholder:

Director Identification Number (DIN) and Digital Signature Certificate (DSC): The Company will need to obtain DINs for all the directors and a DSC for at least one of the directors.

Below are the documents are required to obtain the Director Identification Number (DIN) and Digital Signature Certificate (DSC) of the Director and shareholder:

Mail Id and contact number
Passport size photo
Educational qualification
Occupation
Self-attested copy of PAN card and Passport in case of Foreign Nationals.
Proof of identity (any one-self-attested passport/ driving license/ Voter ID)
Proof of residential address (any one self-attested bank statement, Mobile Bill, Telephone Bill, Electricity Bill)

Note: The utility bills or bank statement being produced should not be older than 2 months and should be self-attested.

Documents required from a foreign company:

Board resolution: Required from the foreign parent Company, approving the incorporation of the subsidiary Company in India. (Duly apostilled in country of origin) and Apostille copy of Charter of Foreign foreign company.
Address proof: The Company will need to provide address proof for the registered office of the Company, such as a rent agreement / copy of deed, along with utility bills not older than two months.
NOC from the landlord: A No Objection Certificate (NOC) from the landlord of the registered office, if the office is on rent.
Shareholding pattern: The Company will need to provide a shareholding pattern, which includes the number of shares held by the foreign parent Company and the Indian subsidiary Company.
Declaration of Directors in DIR-2: Details of the resident director and nominee and if non resident of India, then the Identity proof of the authorised representative duly apostilled.
Foreign Investment Clearance: A certificate of foreign investment clearance from the Foreign Investment Promotion Board (FIPB) or the Reserve Bank of India (RBI) is required, if the foreign investment in the Company exceeds the prescribed limit (Sectoral Cap);
PAN and TAN: The Company will need to obtain a Permanent Account Number (PAN) and a Tax Deduction and Collection Account Number (TAN) from the Income Tax Department. (Including declaration from foreign subscribers for not having PAN)
GST registration: If the Company is engaged in any commercial activities, it will need to register for GST with the GST department.
Affidavit of the Director: An Affidavit of the Director of the Foreign Parent Company stating that the registered office of the Indian subsidiary is the principal place of business in India.

Process of registering a Foreign Subsidiary Company/WOS in India

The process of registering a foreign subsidiary Company in India involves several steps, including obtaining government approvals (MCA) and registering with various government departments if applicable (RBI/FIPB) etc.

1. Capital: The subsidiary Company being registered in India shall determine the capital structure with the amount of initial authorized capital to be infused in the Company. The capital structure helps in reaping the benefits of financial leverage based on the debt ratios as compared to the foreign parent Company.

2. Name Reservation: the proposed name should be unique resembling the nature of business being registered in India in accordance with Rule 8 of the Companies (Incorporation) Rules, 2014. The name application can be selected of the basis of the following:-

o In case of the subsidiary or wholly owned subsidiary (WOS), the foreign Company can use the coin word of its name as the coin word for Incorporation of Company in India to take advantage of its goodwill in the foreign division.

o A foreign companies can apply the same name (name in foreign country) in India by using the word “India” in its name.

o If foreign Company has a registered Trademark, it can use that trademark for incorporation in India.

o Any other name as decided by the Foreign Company.

Name approval can be obtained through single web-based application form i.e., SPICe+ with two parts viz: Part-A (Name approval) and Part-B (Incorporation and other details of Company)

Note: Web-based means, the forms cannot be downloaded but filled online on MCA portal.

Steps for Name reservation for new companies:

2.1. Login on MCA Portal (Pre-existing users can use an earlier account or new users have to create a new account.)

2.2. After login, click on New Application and it has to be filled on real time basis and below are the details required to be mentioned in online form:

1. Type of the Company (i.e., Part I, Producer, OPC, Section 8 etc.)
2. Class of Company (whether Private, Public)
3. Category of Company (whether Company limited by shares, limited by Guarantee or unlimited)
4. Sub-category State Government, Union Government, Non-Government Company, Subsidiary of the Company incorporated outside India)
5. Main Division of Industrial Activity (enter number belonging to Industrial Activity)/Description of main division
6. Particulars of Proposed or Approved Name. (User has to enter two proposed names to be reserved, for incorporation of a new Company.

7. The proposed name of the foreign subsidiary Company being registered in India should not be prohibited under Section 4(2) & (3) of the Companies Act, 2013 read in accordance with Rule 8 of the Companies (Incorporation) Rules, 2014.

2.3. Completing the application by populating the information as asked followed by save and submit application. The applicant can submit the application for name reservation by paying the filing of ? 1000 (Rupees One thousand only) or continue with the SPICe+ Part-B with incorporation and other details.

3. Incorporation of the Company: After name approval, the applicant continues with the Incorporation of Company within 20 days only subject to further extension after payment of Additional fees and prepares the above-mentioned documents stated.

4. Other linked forms: Filing the details of PAN & TAN in SPICe+ form. The PDF file is to be downloaded and later used as an attachment. The information pertaining to GST, EPFO, ESIC, and bank accounts in AGILE PROform. (Mandatory for all new companies.)

5. INC-9: the e-form INC-9 where the declaration by first director and subscriber is to be downloaded (duly apostilled) and filled. Post INC-9 is generated web-based and the DSC affixation is to be by one of the Director / subscribers on the same.

6. Filing form with MCA: All the web-based forms are to be downloaded in PDF which is to be filed with MCA i.e., SPICe+, AGILE PRO, INC-9. After downloading the affixation of the Digital Signature Certificate (DSC) is required on the forms. Once done, the form is submitted with MCA on payment of required filing fees online. On payment a unique service request number (SRN) is generated for tracking and record purposes.

7. Certificate of Incorporation: The Certificate of Incorporation is generated with details of the Subsidiary Company registered having CIN, PAN & TAN after successful scrutiny by the regulatory authorities.

Post Company Registration formalities:

Receipt of foreign subscription money along with KYC from the AD Bank
Filing of INC-20A – Declaration of commencement of subsidiary Company
Filing of Nominee Forms MGT-6 and BEN-2 (If applicable)
Collect FIRC Certificate from bank per FDI regulation for the filing of FCGPR;
Issue share certificates to the subscribers within 2 Months from the date of Incorporation
Filing of FC GPR with RBI in single master form (SMF) per the FDI regulations, including the below documents:

Valuation report (CA Certificate in case of Initial Capital)
Copy of COI, MOA & AOA, Board resolution for allotted securities/INC-20A/Share and share certificates
Remittance details (Name & Address of AD Bank, Mode of Payment, Date and Amount of remittance)
Copy of Foreign Inward Remittance Certificate (FIRC)
Copy of Know Your Customer (KYC)
Debit statement details
Certificate from Company Secretary stating all compliances are adhered to.

Features of WOS/Subsidiary Company in India:

Control and ownership: The foreign parent Company holds a controlling stake in the Indian subsidiary Company, and typically directs its management and operations.
Independent entity: The subsidiary Company operates as an independent entity under Indian laws and regulations, and is responsible for its own financial and legal obligations.
Separate legal identity: The Indian subsidiary Company has its own separate legal identity from the foreign parent Company, and is subject to Indian laws and regulations.
Limited liability: The liability of the shareholders of the subsidiary Company is limited to the amount of capital they have invested in the Company.
Taxation: The Indian subsidiary Company is subject to Indian tax laws, and is required to pay taxes on its income earned in India.
Compliance with Indian laws: The subsidiary Company is required to comply with all relevant Indian laws and regulations, including labour laws, environmental laws, and laws related to intellectual property.
FDI limits: The foreign direct investment limits for foreign subsidiary companies in India are different from sector to sector, and are subject to the change in government policy.
Exit option: The foreign parent Company has the option to exit from its Indian subsidiary by selling its stake to another foreign or Indian entity, subject to the approval of the Reserve Bank of India (RBI)
No repatriation limits: The foreign parent Company can repatriate its profits and dividend to its home country without any restrictions, subject to the compliance of the Indian foreign exchange laws

FAQ’s on Registration of Foreign Subsidiary Company:

Q. What is the purpose of notarization and apostille at the time of Incorporation of a company in India by Foreign Nationals/NRI/or body corporates?

A. At the time of incorporating a subsidiary/WOS company in India, certain documents may need to be notarized and apostilled for residents outside of the British Commonwealth and signatory countries of the Hague Convention. Notarization involves the certification of documents by a notary public, confirming the authenticity of the signatures and the identity of the individuals involved.After notarization, the documents typically need to be apostilled.

An apostille is a specific type of authentication issued in accordance with the Hague Convention. It is attached to the document by a competent authority in the country where the document was notarized. The apostille certifies the validity of the notary's signature and seal.

The purpose of notarization and apostille is to ensure the acceptance and recognition of the documents in foreign jurisdictions. By completing these processes, the subsidiary company's incorporation documents gain international validity and can be presented to authorities in other countries as legally binding evidence.

Q. What documents need to be notarized and apostilled at the time of incorporating a subsidiary company in India?

A. When incorporating a subsidiary company in India, the following documents typically need to be notarized and apostilled-

Physical copy of Memorandum of Association (MoA): This document outlines the company's objectives, scope of business, and its relationship with shareholders.
Physical copy ofArticles of Association (AoA): The AoA contains rules and regulations governing the internal management of the company, including the rights and duties of shareholders and directors.
Proof of Identity: Documents verifying the identity of the directors and shareholders, such as passports, national ID cards, or driver's licenses. Proof of Address: Documents providing evidence of the residential addresses of the directors and shareholders, such as utility bills or bank statements.
Consent Letters and Other Documents under Incorporation Rule: Consent letters from the directors and Shareholders, confirming their agreement to act as company officers and shareholders.
Board Resolutions for Body Corporates and KYC: Company KYC like COI & Resolutions passed by the board of directors of the subscriber company (Body Corporates) regarding the incorporation, appointment of an authorized representative or Nominee in case of WOS company registration, and other relevant matters allied to compliance
Power of Attorney: If applicable, a power of attorney document granting authority to individuals to act on behalf of the subsidiary company.

Q. Is notarization and apostille the same or different ?

A. Notarization and apostille are indeed different processes, and their requirements vary depending on the type of country involved in the registration of a company in India:-

In case of Commonwealth Countries:

- Signatories from Commonwealth countries need to have their signatures and address on the memorandum and articles of association, as well as proof of identity, notarized by a Notary (Public) in that specific Commonwealth country.

In case of Hague Apostille Convention Countries:

- For individuals from countries that are party to the Hague Apostille Convention, their signatures and address on the memorandum and articles of association, along with proof of identity, must be notarized in their country of origin by a Notary (Public). Following notarization, the documents need to be duly apostilled in accordance with the Hague Convention.

In case of Countries outside the Commonwealth and Hague Apostille Convention:

- Individuals from countries outside both the Commonwealth and the Hague Apostille Convention must have their signatures and address on the memorandum and articles of association, as well as proof of identity, notarized by a Notary (Public) in their respective country. The certificate of the Notary (Public) should then be authenticated by a Diplomatic or Consular Officer empowered under the Diplomatic and Consular Officers (Oaths and Fees) Act, 1948, or by officials mentioned in the Commissioners of Oaths Act, 1889.

Hence, notarization is a common requirement for all types of countries involved in the registration of a company in India. However, apostille is specifically required for individuals from Hague Apostille Convention countries.

For countries outside the Commonwealth and the Hague Apostille Convention, the additional step of consularisation/authentication by a Diplomatic or Consular Officer is necessary after notarization.Note: Physical copies of MoA/AoA along with all Foreign Documents are required to be signed in case non- individual first subscribers are based outside India or individual foreign subscribers do not possess a valid business visa or any other scenario.