The Companies Act, 2013 control the Indian Subsidiary Company Registration process. It is one of the largest and fastest-growing markets in the world because foreign countries show their interest to start their operations in India. The company has control over it called Parent company or holding company. The parent company has the right to control the subsidiary company either completely or partially. For Incorporation of an Indian Subsidiary Company, there is a requirement of minimum one Indian Director and one to be Foreign Director. Also, all the Subsidiary Companies must have to follow the laws of the country in which they are starting their operations. A Foreign National other than Bangladesh or Pakistan incorporated outside India can own their subsidiary as a company and can invest. In this blog, we are discussing the process of Indian Subsidiary Company Registration.
What are the characteristics of India Subsidiary Company Registration?
It has to pay a low tax rate of 30%, which in case of Foreign Company has to pay 40% of tax.
As per the Union Budget 2020, the distribution tax is NIL now.
There is no requirement of prior approval for the repatriation dividend for these companies.
What are the requirements of the Indian Subsidiary Company Registration in India?
Below are the lists of requirements of India Subsidiary Company Registration in India:
No minimum capital requirement to form an Indian Subsidiary Company.
Minimum two directors required for incorporation of the company.
Minimum of two shareholders is required. Shareholders can be either entity or any individuals, or it can be both the combination.
Must hold 50% of total equity share capital.
It requires DIN for all the designated Directors.
What are the benefits of Indian Subsidiary Company Registration?
Following are the benefits of Indian Subsidiary Company Registration:
Brings Foreign Direct Investment
The Government of India has approved 100% participation of FDI in case of fast-growing businesses; that is to say, Foreign Direct Investment is allowed 100% without any prior approval. Though if the applicant is a Partnership firm or Proprietorship or a Limited Liability Partnership then a prior approval from the Government of India for FDI is required.
Limited Liability
Members and Directors of the company have the protection of limited liability. The liability of the members and directors are strictly limited to their company’s share. Limited liability attribute protects the members and directors of the company in the time of any financial distress faced by the company. Personal assets of members and directors will not be at risk as the loss will bearer will be the company.
Perpetual Succession
Perpetual succession means that if anything happens to the members and directors of the company, the company will exist in the future with new members and directors. Change in members, death of a member or director, Insolvency, transfer etc will not have any effect on the existence of the company.
Scope of Expansion
An Indian Subsidiary Company relishes all the civil liberties of a Private Limited Company. The expansion and growth of the business are easy because it raises capital from a venture capitalist, financial institutions and the investor.
Borrow Funds
A fully-owned subsidiary company in India can borrow funds from financial institutions in the form of loans.
Sue And Sued
An Indian subsidiary company has the right to sue and can be sued. The company acts as a separate legal entity.
Obtain Property in India
The foreign subsidiary company works on a self-governing structure which provides them with the authority to purchase properties in India.
What are the necessary documents required for Indian Subsidiary Company Registration?
Following are all the necessary documents required at the time of Indian Subsidiary Registration:
For Indian Citizen:
Submit PAN Card.
Address Proof like the latest electricity bill, water bill, telephone bill, etc.
Identity proof such as Aadhar card, Voter ID, Driving License, etc.
For Foreign citizen:
Passport.
Address Proof. (Must certify the documents by Indian Consulate)
Identity Proof. (Must certify the documents by Indian Consulate)
Other important documents:
Passport-sized photograph of all the proposed directors and shareholders.
Digital Signature Certificate of all the directors and shareholders.
Directors Identification Number of all the directors and shareholders.
Memorandum of Association of the company.
Article of Association of the company.
No Objection Certificate from the person who owns the property.
Residential Proof.
Certificate of Incorporation issued by the Foreign Government.
What is the procedure of Indian Subsidiary Company Registration in India?
You can follow the below steps to get the Indian Subsidiary Company Registration. Before the registration, you must carefully check all the documents.
Step 1: Fill the application in the prescribed form:
SPICE+ Form is to be filled for the registration of a subsidiary. This form has two parts:
In Part 1: Searching name for new companies.
In Part 2: Application for DIN, PAN & TAN Application, GSTIN Application, Bank Account Opening, Incorporation, ESIC, and EPFO registration.
Step 2: Submission of documents:
After the filling SPICE+ Form, submit all the required documents as we mentioned above. Without missing any of these documents, you are not able to file an application form.
Step 3: Fee Payment:
After uploading the documents, the applicant must pay the prescribed fees.
Step 4: Issuance of Certificate
After submitting the application form along with the prescribed fee, the Registrar will verify all the documents. If the Registrar of Companies (RoC) didn't find any mistakes in the form and documents, they would issue the Certificate of Incorporation to the company.
Annual Compliances of Indian Subsidiary Company
Following are the annual compliances of Indian Subsidiary Company:
FEMA Guidelines.
Guidelines with MCA (Ministry of Corporate Affairs).
Compliance with Companies Act, 2013.
Compliances with Income Tax Act, 1961.
Annual return with the ROC (Registrar of Companies).
Filing with the RBI (Reserve Bank of India).
Filing with the SEBI (Securities and Exchange Board of India).
Conclusion
Today's time, many of the foreign companies want to start their businesses in India because India becomes 7th largest economy in the world, and by 2025, it will become 3rd largest economy. Under Companies Act 2013, a subsidiary company can be defined in which a parent body or a foreign company has 50% minimum of the total share capital. The Companies Act, 2013 control The Companies Act, 2013 control the Indian Subsidiary Company Registration process. process.