Overview of Indian Subsidiary Company Registration

Many foreign investors are willing to start their business in India as our nation provides tonnes of opportunities because of its fast-growing market. Any foreign national apart from the citizen of Pakistan and Bangladesh or an entity formed and operating outside India can invest in the Indian market and holds the power to make their own subsidiary company in India by obtaining shares pertaining to the matters of FDI policy of India. Before getting into the process of Indian Subsidiary Company Registration make sure that as a business entity you have at least one Indian Director who must be residing in India and one Foreign Director which is must for forming Indian Subsidiary Company.

A subsidiary company is also called sister company and the company which has control over it is called parent company or holding company. Parent company holds the right to control the subsidiary company either partially or completely.

Companies Act 2013 controls the Indian Subsidiary Company Registration process. As per Companies Act 2013, a subsidiary company can be defined as a company in which a foreign corporate body or parent body has minimum 50% of the entire share capital. Parent company has a grip over a subsidiary company. It is necessary for a subsidiary company to abide by the laws of the nation in which they are planning to establish or are already established. Hence, if a subsidiary company is established in India then it is crucial for the company to follow the law in force in India.

An important thing to keep in mind is that a subsidiary company of a foreign parent company is regarded as a separate legal entity and subsidiary company is obliged to work as per the norms of the country where it is situated. Business personnel can register an Indian subsidiary company as a private limited company or a public limited company.

• A private limited organization isn't available to the general population and appreciates the benefits over Public Company given by the Companies Act, 2013.
• A public limited company is where the public holds an enthusiasm for it and it is required to conform to various principles and guidelines as indicated by the Companies Act, 2013.

Benefits of Indian Subsidiary Company Registration

• Brings Foreign Direct Investment

  Indian government has approved 100% involvement of FDI in case of fast growing business industries; that is to say, FDI is permitted 100% without any foregoing approval. Although if you are a Partnership firm or LLP or Proprietorship then you may need a beforehand approval from government for FDI.

• Limited Liability

  Directors and members of the company have limited liability. They are stringently limited to their company’s share. Limited liability trait protects the Director or member of the company in the time of any loss or financial distress bore by the company. Personal assets of Directors and members will not be at risk due to the loss suffered by the company.

• Perpetual Succession

  Perpetual succession means no matter what happens to the members or directors of the company, the company will continue to exist. Insolvency, change in members, death, transfer etc will not have any effect on the existence of the company.

• Scope of Expansion

  An Indian Subsidiary Company enjoys all the privileges of a Private Limited Company. The growth and expansion of business is easy because it raises capital from financial institutions, venture capitalist, and the investor.

• Borrow Funds

  A fully-owned subsidiary company in India has the benefit of borrowing funds from financial institutions in the form of loans.

• Sue and Sued

  Indian subsidiary company acts like a legal person; it can sue and can be sued.

• Obtain Property In India

  Foreign subsidiary company works on an independent structure which gives them the authority to buy properties in India.

Documents Required for Indian Subsidiary Company Registration

Indian National

• PAN Card information
• Address Proof
• Identity Proof such as Aadhaar Card, Driving License, Voter Id

Foreign National

• Passport
• Address Proof (Indian Consulate must certify the document)
• Identity Proof (Indian Consulate must certify the document)

Other Crucial Documents

• Directors Identification Number (DIN)
• Digital Signature Certificate (DSC)
• Memorandum of Association (MOA) and Article of Association (AOA)
• No Objection Certificate from the person who owns the property of business place
• Certificate of Incorporation granted by the foreign government
• Residential Proof

Characteristics of Indian Subsidiary Companies

• Beforehand approval is not required for the repatriation dividend
• Indian subsidiary companies follow Indian transfer pricing framework
• Union budget 2020 says that dividend distribution tax is nil

Indian Subsidiary Company Registration Procedure

MCA has introduced a new form to simplify the process of registration. The form is called SPICe+ form and it consists of 2 parts, which are Part A (Name Reservation process) and Part B (includes all the incorporation application)

PART A

Name Reservation process

PART B

Once Name reservation process is done, it includes all the incorporation application and these are:

Indian Subsidiary Company registration process is incomplete without obtaining Digital Signature Certificate from the Certifying authority. DSC is a prerequisite need.

• Capital

  No minimum capital is required.

• Directors

  Subsidiary company cannot be formed without having minimum two directors and one has to be the resident of India.

• Shareholders

  Minimum two shareholders are necessary to form Indian Subsidiary Company.

• Equity Shares

  50% of the equity share capital should owned by the parent company.

• DIN

  Director Identification Number of all Directors is necessary.

Following are the Steps for incorporation of Subsidiary Company through SPICe+ form, which are as follows:-

SPICe+ Login

• At the very first, you need to Login to MCA (Ministry of Corporate Affairs) portal
• After that, please click on MCA services on “SPICe+”

Spice+ Part A

• In order to get it done, the user fills the details of proposed name of the Subsidiary company class, type, sub-category, category, and click on auto check button. It must be noted that auto check performs first level automatic inspection of the proposed name against any discrepancies the name rules.
• Once Part-A is completed, the user can click on: Submit for Name Reservation for the establishment or, Proceed for Incorporation or, Cancel if needed.
• Part-b of the web form will get enabled if the user opted for proceed for incorporation which will showcase different sections.

SPICe+ Part B

• Before going through the SPICe+ Part B, you must note that each section of Part B contains ‘Save & continue button”. You may check form validations which will happen on each and every segment of the section.
• You need to enter the basic detail related to the Subsidiary company to be incorporated i.e. registered or Correspondence Address, Subscribers and directors details, Details related to capital, etc.
• You need to enter the basic details for the issuance of PAN (Permanent Account Number) and TAN (Tax Deduction Account).
• Also, you must make sure to upload mandatory attachments in the web form and confirm on the important declarations & click on the pre-scrutiny & click on submit button once pre-scrutiny is successful.
• Moreover, the user will get a confirmation message one time once web form is submitted successfully in the portal.
• It’s also must be distinguished that you being the user can also download Spice+ Part-B pdf for affixing DSCS from the dashboard.
• Also all the important linked forms get enabled as well as available for the user to fill and submit based on the fields/parameters set by the user in Part-B form.

AGILE –PRO

• The AGILE –PRO web form replaced the old AGILE form (INC-35), where AGILE stands for “Application for Goods and Services identification numbers, employees state insurance corporation registration plus Employees provident fund organization registration. AGILE-PRO needs to be filed as linked with Spice+ in order to get the following requirements, which are as follows:-

     • Registration with ESIC.

     • Registration with GSTIN.

     • Bank account number.

     • Registration with EPFO.

     • Professional Tax Registration.

eMoA and eAoA form

• Electronic Memorandum of Association (eMoA) is known to be the charter of the company can be filed as a linked form to Spice+ in order to get the incorporations.
• Electronic Articles of Association (eAoA) provides all the regulations connected to internal affairs of the Subsidiary company can be filed as a linked form to SPICe+ in order to get the incorporations.

URC-1 INC-9 PDF Generations

• It is mandatory to file “URC-1 form” in case of Part-I companies, holding all the details of existing entity.
• INC-9 declaration form shall be auto populated supported by the details of subscribers and directors entered in Part B. It will be available in dashboard to download and affix DSCs for the user.

Spice + Upload

• User must click on upload forms option After affixing all other linked forms and DSCs in Spice+ Part B pdf,.
• The unique Service Request Number (SRN) will get generated on successful upload of forms which will be displayed to the applicant.
• You must note that the SPICe+ form has to be resubmitted in the similar manner in case where the forms require resubmission for any fault being bannered upon processing.

Overall Attachments required for SPICe+

• Memorandum of Association (MOA).
• Articles of Association (AOA).
• Declaration by the first subscribers and directors (Affidavit not required)
• Proof of office address.
• Copy of utility bills (May vary).
• Copy of COI (certificate of Incorporation) of foreign body corporate (if any).
• Passed Resolution by Promoter Company.
• The concent of 1^st directors in other entities.
• Consent of Nominee in Form INC-3.
• Residential address & Proof of identity of subscribers.
• Residential address & Proof of identity of the nominee.
• Residential address & Proof of identity of applicant I, II, III.
• In case of Chapter XXI (Part 1) Companies, resolution of unregistered companies has to be submitted.
• Declaration in Form (INC-14).
• Declaration in Form no (INC-15).
• Optional attachments if required

Overall Attachments required for AGILE –PRO:

• Documents related to principle place of business.
• Documents related to appointment of Authorised Signatory for GSTIN (either of the documents Letter of Authorization /Managing Committee and acceptance Letter/ Copy of Resolution passed by Board of Directors).
• Documents related to identity of Authorised Signatory for the opening of a bank account.
• Documents related to address of Authorised Signatory for the opening of a bank account.
• Documents related to Specimen Signature of Authorised Signatory for EPFO

Annual Compliances of Indian Subsidiary Company

Indian Subsidiary Company is no different from any other Indian Company and the norms pertaining to the Indian Company are the same for the Indian Subsidiary Company. If the applicant company successfully follow the above mentioned procedure along with the required documents then it will receive the Certificate of Incorporation on time.

How Corpbiz will help you?

• Facilitate comprehensive support throughout the incorporation process.
• Well versed in underlying compliances and registration legalities.
• In-depth experience in tackling post-incorporation compliances.
• Offers assistance in documents and application.
• Charges Nominal fees for incorporation.