Foreign Subsidiary Company Registration
Foreign Subsidiary Company Registration in India
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 owned by a foreign company or individual but registered in India.
In today’s business environment, foreign investors are highly attracted to India’s fast-growing economy, large consumer market, and cost-effective labor. This makes India one of the most sought-after destinations for expanding businesses.
A subsidiary company is one that is controlled directly or indirectly by another company (the parent or holding company). If a foreign company holds more than 50% shares in an Indian company, the Indian company becomes its foreign subsidiary. If the foreign company holds 100% shares, it is termed a Wholly Owned Subsidiary (WOS).
Registering a foreign subsidiary company in India provides:
Local presence in India
Access to India’s fast-growing market
Legal recognition under the Companies Act, 2013 and FEMA Act, 1999
It is strongly recommended that foreign companies seek expert guidance to ensure compliance with all legal and regulatory requirements.
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 Proprietorships, Partnership Firms, or One-Person Companies. However, FDI can be made in a Private Limited Company, subject to RBI approval.
Benefits of Foreign Subsidiary Company Registration
Registering a foreign subsidiary company in India can offer several benefits for foreign businesses looking to expand their presence in the Indian market. Below are some of the key benefits:
1. Limited Liability
Registering a foreign subsidiary in India provides limited liability protection to the parent company. This ensures that the parent company’s assets remain safeguarded against any financial losses or legal disputes involving the subsidiary.
2. Access to the Indian Market
India is a fast-growing economy with a large population and a strong middle class. A foreign subsidiary in India allows direct access to this vast market, boosting revenue potential and profitability.
3. Tax Benefits
Foreign subsidiaries in India can avail tax advantages, including lower tax rates and exemptions, depending on the business structure and location of incorporation.
4. Easy to Set Up
The process of setting up a foreign subsidiary in India is relatively quick and straightforward, often completed within a few weeks. The Indian government has also taken measures to simplify compliance procedures.
5. Credibility
Having a registered subsidiary in India enhances the credibility and reputation of the parent company among Indian customers, suppliers, and business partners. It strengthens long-term trust and growth potential.
6. Localized Operations
A subsidiary provides a localized presence in India, allowing the parent company to adapt to local market trends, consumer behavior, and regulatory requirements more effectively.
Requirements for Registration of Foreign Subsidiary Company in India
To incorporate a Foreign Subsidiary Company / Wholly Owned Subsidiary (WOS) in India, the following requirements must be fulfilled:
1. Capital Requirement
There is no minimum capital requirement prescribed under Indian law for incorporating a Private Limited Company, including a Foreign Subsidiary.
2. Directors
A minimum of two directors are required.
Both must be individuals, and at least one director must be a resident of India.
Note: A “Resident in India” is defined as a person who has stayed in India for at least 182 days in the previous year. For newly incorporated companies, this requirement will apply proportionately for the financial year in which the company is formed.
(Ref: Section 149(3), Companies Act, 2013)
3. Shareholders
As per the Companies Act, 2013, a Private Limited Company must have at least two shareholders.
Shareholders can be individuals, entities, or a mix of both.
4. Registered Office
A foreign subsidiary must maintain a registered office in India capable of receiving official communication.
5. Filing of Documents
Companies must submit various statutory documents with the Ministry of Corporate Affairs (MCA), including:
Memorandum of Association (MoA)
Articles of Association (AoA)
Board Resolutions
Other required statutory documents
Documents Required for Foreign Subsidiary Company in India
The following documents are generally required to register a Foreign Subsidiary Company in India:
Identity proof of all directors and shareholders
PAN for Indian Nationals
Passport for Foreign Nationals
Address proof of all directors and shareholders
Aadhaar card, bank statement, or utility bill
Certificate of Incorporation & Articles of Association of the foreign parent company
Must be duly attested by the Indian embassy or consulate
Board Resolution of the foreign parent company approving the establishment of a subsidiary in India
Power of Attorney (PoA) in the form of a board resolution in favor of an authorized person acting on behalf of the foreign parent company
KYC documents for the authorized representative of the parent holding company
Memorandum of Association (MoA) & Articles of Association (AoA) of the Indian subsidiary
Duly signed and notarized
No Objection Certificate (NOC) from the owner of the registered office of the subsidiary
Declaration from Indian Resident Director stating that they are not a director in more than the prescribed number of companies
Declaration from all directors and shareholders that they are not disqualified to act as directors or hold shares
Bank statement of the foreign parent company to show proof of minimum authorized share capital
Letter from the Indian parent company (if applicable) granting consent for use of its name by the subsidiary
Any other documents as required by the Department from time to time
Step 1: Obtain Digital Signature Certificates (DSC)
All proposed directors must obtain DSCs.
DSC is required for filing e-forms online with the Ministry of Corporate Affairs (MCA).
Step 2: Apply for Director Identification Number (DIN)
All proposed directors (at least 2 required) must apply for DIN.
At least one director must be a Resident of India (staying ≥182 days in the previous year).
Step 3: Name Reservation
File the SPICe+ Part A form on MCA portal.
Ensure the chosen name does not conflict with existing companies/trademarks.
If the foreign parent company name is used, a NOC/Board Resolution from the parent company must be provided.
Step 4: Drafting of Charter Documents
Memorandum of Association (MoA) & Articles of Association (AoA) of the Indian subsidiary must be prepared.
These documents should align with the objectives of the foreign parent company.
Notarization and apostille may be required for foreign-signed documents.
Step 5: Filing of Incorporation Forms
File SPICe+ Part B form (INC-32) along with:
e-MoA (INC-33)
e-AoA (INC-34)
AGILE-PRO-S (for PAN, TAN, GSTIN, EPFO, ESIC, Bank Account)
Attach required documents:
Parent company’s Certificate of Incorporation & Board Resolution
Proof of registered office in India
KYC of directors/shareholders
Step 6: Verification by Registrar of Companies (RoC)
RoC reviews the application and documents.
Queries, if any, must be replied to promptly.
Step 7: Certificate of Incorporation (CoI)
Once approved, RoC issues a Certificate of Incorporation.
The CoI contains the Corporate Identification Number (CIN) of the subsidiary.
Step 8: Post-Incorporation Compliances
Apply for PAN & TAN of the company.
Open a bank account in the name of the Indian subsidiary.
Issue share certificates to the foreign parent company.
Report FDI inflow to RBI through Form FC-GPR within prescribed time.
Ensure FEMA & Companies Act compliance.
Frequently Asked Questions
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