Foreign Subsidiary Registration | Owned Subsidiary Registration in India

India is one of the fastest-growing economies in the world, in which there are many business opportunities that make it a favorite place for an investment of NRI, foreign citizens, and foreign companies. There are many ways by which foreign investment can be made in India. Incorporation of foreign subsidiaries in India is one of the most successful and demanding.

Meaning – Foreign Subsidiary Company:
The subsidiary company is a voting stock company (which is more than 50%) controlled by another company, which is usually known as the parent company or holding company. In cases where a parent company is a foreign subsidiary, the subsidiary should follow the laws of the country where it is included and operated. Therefore, if a foreign assistant is included in India, then he has to follow the applicable laws in India.

How to get a foreign assistant in India?

Company type selection-

In accordance with FEMA guidelines, foreign direct investment (FDI) is not allowed in the case of proprietorship, partnership firm, and one-person company. Although investment is allowed in LLP, prior approval of RBI is necessary for this.

Therefore, the simplest and fastest way in India by NRI and foreign citizens/institutions is through the incorporation of a private limited company.

Minimum Requirements –

Capital: There is no minimum capital requirement for building a private limited company in India.
Director: In order to involve a private company in India, a minimum of two directors are required. Both the persons and at least one of whom should be resident of India. (A resident of India is a person who has lived in India for at least 182 days in the previous year).
Shareholders: The Company Act, 2013 requires that there is a minimum of two shareholders in a private limited company. There is no condition for the shareholders’ residential status. The shareholder can be a person or organization or a combination of both.
Procedure for Company Registration in India:

  • Receiving DSC and DIN-

The first step for assistant registration is to apply for directors’ DSC (digital signature) and DIN (Director’s Identity Number). The primary documents required for obtaining DIN and DSC are as follows:

Proof of identity (PAN for Indian citizens and copy of passport for foreign citizens)
Driving license, bank statement or copy of any utility bill (not more than two months old)
If living in India, then there is a residence permit for foreigners.
Passport size picture
For all foreign documents and non-residents, all the above documents should be made notices and conservation or apostasy by the competent authority, as the case may be.

  • Name approval:

The selection of a unique and acceptable name for the proposed company is one of the important steps in the entire incorporation process. The name should be in line with the purpose of the company and should not be identical to the undesirable by existing institutions or law.

  • Incorporation application:

This is the last step of the assistant registration process. It requires the filing of the company’s Memorandum and the Association of Associations digitally along with various other documents duly executed by the proposed directors and shareholders.

List of Incorporation documents for implementation:

Subscriber Sheet of Association Articles
Memorandum of Association’s Subscriber Sheet
Declaration by the Director as DIR 2
Declaration of Director in Form INC 9
Generally, in order to be self-certified by Indian citizens, incorporation documents are required. However, in the case of foreign citizens, the process is as follows:

Documents are signed outside of India, then they should be notified by a public notary of residence, and as the case may be, protected or motivated by the competent authority.

If documents are signed in India, then a copy of the visa and stamped passport certifies his presence in India at the time of signing.

If the customer is a foreign entity, then the incorporation documents should be signed by a representative of the foreign entity. The name of the authorized person can be duly attested in an authorization letter and in the home country of the subscriber company because the number of shares subscribed must be notarized, consulate or apostate.

Upon receipt of the incorporation application, the registrar will issue a certificate with a corporate identification number (CIN). The pan and tan of the company will also be allocated together.

Treatment of share capital and necessary compliance by holding company:

Foreign investment in Indian companies is regulated by the FEMA guidelines and the Reserve Bank of India. Whenever the holding company invests in the share capital of the Indian subsidiary, it has to comply with the RBI guidelines along with compliance under the Companies Act of 2013.

RBI Complainant:

The reporting process of two stages is followed when a company is collecting money from any foreign investor:

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