Wholly Owned Subsidiary

Company Registration in India

Unlock the potential of India’s markets with your wholly-owned subsidiary. We provide comprehensive legal assistance in establishing a subsidiary company in India, including incorporation, documentation, and compliance.

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$ 1,000/-
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$ 499/- (Prof Fee)
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$ 501 (50%)
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On Actual

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We will provide a questionnaire and a List of Documents for Company Incorporation. Our process is Online & hassle-free.

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Why Should You Set Up a Foreign Subsidiary Company in India?

India is an attractive destination for global investors, bursting with numerous opportunities of foreign investment. Its vibrant economy with ever-expanding consumer base, and dynamic markets have transformed major cities like Chennai, Delhi, Noida, Bangalore, and Mumbai into thriving hubs of foreign subsidiary companies. These companies not only receive support from beyond the borders, but also within Indian territories through easy and streamlined registration process.
So, whether you’re registering a subsidiary in India, or a brand new foreign company, rest assured of a smooth incorporation process! Initial steps to start a subsidiary in India involves assessing the limits and routes of foreign investment in your sector. Next, you need to understand the legal requirements for setting up a wholly owned subsidiary in India. Our expert and skilled team of CA, CS, and attorneys will take it from here and provide a smooth, hassle-free journey of incorporation.

Benefits of Establishing a Manufacturing Subsidiary in India

Navigating the Pathway for Setting Up a Wholly-Owned Subsidiary in India

Foreign direct investment in India is primarily allowed through the automatic route for various sectors and countries. However, it’s worth noting that investments from countries sharing land borders with India are exceptions. These include Pakistan, Bangladesh, Bhutan, Nepal, China, and Afghanistan. Companies from these countries require prior government approval for bringing in foreign capital into their Indian Subsidiaries.
So, why should you set up your subsidiary company in India? Well, setting up a wholly-owned subsidiary in India not only grants the businesses full control, but also gives tax advantages. A subsidiary registration in India ensures optimal market entry into one of the world’s most competitive business landscapes. Your Subsidiary Company can dive into the endless possibilities of revenue generation and growth in this country!

Requirements for Setting Up a Wholly Owned Subsidiary in India

For the incorporation of a foreign subsidiary company in India, certain requirements must be met. These requirements are related to foreign investment, shareholders, directors, and a registered office. We have explained all these requirements in detail below. If you have any further queries, contact our team for assistance.

FDI Limits & Route: Indian Subsidiary capital requirements are met by bringing in FDI from the parent company. So, make sure you determine the permitted FDI levels and routes for your sector beforehand. If your sector falls under the approval route, foreign investment approval in India from the Central Government will be necessary. Refer to the latest RBI Notification or Press Note for guidance.

Minimum Shareholders & Shareholding: A Foreign Company Subsidiary in India must have at least 2 shareholders. One of them must be its holding company with more than 50% shareholding. However, it can also own 100% shares, if it nominates at least 2 Indian residents as its nominee shareholders.

Minimum Directors: A Subsidiary company must have at least 2 directors, of which at least one must be a Resident Indian. A resident Indian director is one who has lived in India for more than 120 days, in the previous Financial Year.

Registered Office in India: A lockable and fully constructed registered office in India is necessary for setting up a Subsidiary. However, in the absence of such an office space, the subsidiary company can be incorporated with a temporary communication address. Later, within 30 days from incorporation this temporary address can be replaced with a permanent registered office address in ROC records.

ROC Approved Name: A wholly owned subsidiary company in India can use its holding company's name with “India” as a suffix. It can also have a completely different name altogether. This name must be approved by the Registrar of Companies through the appropriate approval process.

Document Legalisation: Documentation for Subsidiary company in India may originate from the foreign country where the company is based. In that case, it must be properly legalised and then filed for registration.

Note: If the origin country is a Commonwealth nation, notary attestation will be enough for document legalisation. For countries that are part of the Hague Convention, apostille attestation is obtained. Other countries can get the attestation from the Indian Embassy. Note that if the foreign promoter visits India on a business visa, his documents may be legalised too.

Documentation for Subsidiary Company in India

Accurate and comprehensive documentation is crucial when establishing an Indian Subsidiary company. The table below presents a comprehensive list of the required documents for registering a foreign company as a subsidiary in India. Ensure that all these documents are self-attested, duly legalised and submitted in the prescribed formats, providing up-to-date information.
Holding Company Documents Individual promoter Documents
  1. Certificate of Incorporation
  2. Address Proof
  3. Articles of Association
  4. Shareholding & Directors Details
  5. Board Resolution
  6. Power of Attorney to Authorised Person
  1. Colour Photo
  2. Passport / Aadhar for Indians
  3. PAN Card or No Pan Declaration
  4. Consent to Act as Director (Form DIR-12)
  5. Digital Signature
Note: Please send the soft copies of these documents and the completed questionnaire shared by our start up advisors. We will thoroughly verify all the information and legal documents you provide. If you require any further answers, please contact us at help@setindiabiz.com. We are always here to assist you promptly and efficiently.

How to Incorporate Subsidiary of Foreign Company in India?

Wondering how to setup a wholly owned subsidiary in india? Simply navigate through the following steps and allow us to take care of the rest! Our team at Setindiabiz will assist you throughout the process for setting up a wholly owned subsidiary in India. Our services begin with the documentation and proceed with the filing of subsidiary company registration application.

Step-1: Documentation Preparation

The foreign company subsidiary registration process in India begins with preparing the required documents. Ensure each document is in the correct format and up-to-date. The key to a smooth application is well-assembled documentation, steering clear of any unexpected rejections. They are essential in making the process hassle-free!

Step-2: Board Approval

Drafting a board resolution by the parent company holds utmost importance. This resolution seeks official approval to establish the subsidiary in India. Simultaneously, it is advisable to prepare a Power of Attorney. This document designates an individual located in India who will be entrusted with the responsibility of managing the subsidiary’s incorporation process.

Step-3: Legalising the Board Resolution

Depending on the country of origin, different avenues can be pursued for legalisation of foreign board resolution. For non-Hague Convention countries, you can approach the Indian Embassy. For Hague Convention members, you can approach an Apostille Office. For Commonwealth nations, notarisation by a public notary will be enough.

Step-4: Name Selection and Approval

The subsidiary can either use the parent company’s name with “India” as a suffix or choose a different name. If the parent has a trademark, the subsidiary can adopt it with a No Objection Certificate. Next, apply for name approval using the RUN or SPICe+ form. Include the legalised board resolution and, if needed, the parent’s trademark NOC.

Step-5: Document Drafting and Legalisation

After name approval, draft essential documents with precision. The Legalisation of these is crucial for authentication. Commonwealth countries can legalise documents with notary attestation, Hague Convention with apostille, and other nations may need Indian Embassy attestation. Note that Promoters visiting India on a business visa must complete in-country legalisation.

Step-6: Incorporation Application

Once documents are in order, start filing the online SPICE Plus application for incorporating the subsidiary. Attach all the necessary documents and the Digital Signature (DSC) of the authorised director. Finally, submit this application online, along with the government fee, to the Registrar of Companies (ROC).

Step-7: Certificate Issuance

After the submission, the Registrar of Companies (ROC) meticulously examines the application. Once the review is deemed satisfactory, the ROC proceeds to complete the process of subsidiary registration in India. After all the steps are completed, the newly formed subsidiary receives a Certificate of Incorporation and a Corporate Identification Number (CIN).

Compliances for Subsidiary of Foreign Company in India

The compliance requirements for setting up a wholly owned subsidiary in India are the same as that of a domestic company. This is because the subsidiary company enjoys a distinct legal status in India. The table below contains a list of a few mandatory compliances applicable to subsidiary companies. Our expert team of skilled and qualified Company Secretaries provide end-to-end assistance in meeting all these compliances with ease.
No Compliances for Subsidiary of Foreign Company in India
Filing Annual Financial Statements
A subsidiary company in India is required to prepare and file its annual financial statements. These include the balance sheet, profit loss statement, and cash flow statement. These statements must be filed every year to the ROC to comply with Indian Accounting Standards.
Tax Return Filings
Submission of annual income tax returns (ITR) is mandatory. Additionally, filing GST returns is also required, if applicable to your subsidiary company in India.
Director's Report Preparation
The preparation and submission of the director's report is mandatory every year. This report details the financial performance, operations, and other significant information of the company.
Foreign Exchange Reporting
Compliance with Foreign Exchange Management Act (FEMA) regulations is crucial every year. This includes annual reporting of foreign investments, remittances, and repatriation of profits from India.

Cost of setting up a subsidiary in India

While setting up a subsidiary in India, understanding and assessing the financial implications are crucial. The cost of setting up a subsidiary in India may vary depending on a multitude of factors. These include applicable government fees, professional fees, stamp duty charges, document legalisation costs and so on. Understanding these factors will help you determine the overall costs of setting up a wholly owned subsidiary in India accurately.

Factors affecting cost of subsidiary registration in India:

  1. Authorised Capital: The initial authorised capital of the subsidiary, which affects government fees and stamp duty during the registration process.
  2. Government Fees: The ROC charges fees for processing and approving the subsidiary’s registration, which can vary based on its authorised capital.
  3. Professional Services:Engaging legal and consulting services to guide through the registration process and ensure compliance incurs professional fees.
  4. Name Reservation: Fees associated with reserving a unique name for the subsidiary prior to registration.
  5. Stamp Duty: This includes the amount of stamp duty paid for stamping certain documents during subsidiary registration in India. Such documents essentially include the company’s AOA and MOA
  6. Document Legalisation: These involve costs for legalising documents which have a foreign origin. The list primarily includes the Memorandum of Association, Articles of Association, and Board Resolution from the parent company.
  7. Location: Registration costs might vary depending on the state or union territory where the subsidiary is registered.

Tax Implications of Setting Up a Wholly Owned Subsidiary in India

India follows a progressive tax regime, combining elements of both residential-based and source-based taxation systems. In this system, resident individuals and businesses are subject to taxation on their income worldwide. However, non-residents individuals and businesses are only taxed on their income generated within India.
Additionally, Indian subsidiaries of foreign companies are considered domestic entities for tax purposes. So, they are accountable for taxes on their global income. We have explained a few important provisions related to Taxation for subsidiaries in India below.

Income Tax Rate for Subsidiaries

The corporate tax rate for Indian subsidiaries of foreign companies has been reduced over the years. As of September 2021, the income tax rate for subsidiary companies is 22%. This is only applicable if they are not availing any other tax exemptions.
The same has been reduced to 15% for newly established manufacturing subsidiaries in India. Additionally, the Dividend Distribution Tax (DDT) has been abolished, which has further streamlined the taxation process. However, dividends are now taxable in the hands of shareholders.

Transfer Pricing Provisions

Transfer pricing is a vital mechanism in the taxation domain, especially for multinational entities. It ensures that transactions between related enterprises across different countries happen at the market price. This is to prevent profit shifting to low-tax jurisdictions. In India, transfer pricing regulations are based on the “arm’s length” principle, drawn from the OECD guidelines.
Any international transactions between associated enterprises must adhere to this principle. Companies must maintain extensive documentation to validate that their cross-border pricing strategies align with market rates. Non-compliance or discrepancies can result in substantial penalties.

Repatriation of Profits from India

Repatriation of profits from India by Indian subsidiaries has been an area of interest for many foreign investors. India does not levy any additional withholding tax on dividends paid to foreign shareholders. This is because these dividends are already taxed in the hands of the shareholder.
However, there is a withholding tax on the repatriation of post-tax profits. The rate may vary based on the Double Tax Avoidance Agreement (DTAA) India has signed with the concerned foreign country. It is essential for parent companies to be aware of these tax rates. This would ensure a smooth and compliant repatriation of profits from India.

Benefits of Setting Up a Wholly Owned Subsidiary in India

There are numerous benefits of setting up a wholly owned subsidiary in India. These benefits collectively make India an appealing option for foreign investment. We have listed all of these benefits for you in detail. If you need further information about the specific benefits your foreign company will receive by opening a subsidiary in India, contact our experts for free consultation.

Full Control and Decision-Making

A wholly owned subsidiary provides the parent company with complete control over operations. This allows streamlined decision-making processes with strategic alignment with the parent's objectives.

Risk Management

Since the parent company owns the entire subsidiary, it can manage and mitigate many risks. Market fluctuations and regulatory changes may be some of these.

Brand Identity and Localization

The company can keep its parent's brand while adapting products, services, and marketing to fit local preferences and needs.

Profit Retention

The subsidiary's profits can stay in the organisation for reinvestment in growth, research, and development, promoting long-term expansion.

Transfer of Expertise & Technology

A wholly owned subsidiary in India facilitates direct transfer of expertise, proprietary technologies, and best practices from the parent company.

Tax Planning and Incentives

By setting up a wholly owned subsidiary in India, a foreign company can take tax advantages offered by the Indian government.

Frequently Asked Questions

We assist in setting up subsidiary companies throughout India. However, we have local teams to provide personalised assistance for subsidiary in Bangalore and subsidiary in Mumbai. Other than these locations, we provide localised assistance in Delhi, Noida, and Hyderabad as well.
A wholly-owned subsidiary in India is a company where the foreign company holds the entire share capital.
Did you know that a subsidiary company in India has its own legal identity, completely distinct from its parent? It’s fascinating how it’s treated as an Indian resident for tax purposes and gets taxed on its global income. On the contrary, a branch office is an extension of the foreign parent company. It is only taxed on the income it earns within India.
Certainly! According to India’s FDI policy, foreign companies are allowed to hold 100% shares in their Indian subsidiaries in some specific sectors. You can refer to the recent FDI policy to know whether a 100% foreign shareholding is permitted to your sector.
The Reserve Bank of India (RBI) issues notifications or press notes to serve as guidelines for For FDI limits across sectors. These notifications specify the permissible limits and mode of FDI, outlining the regulations that need to be adhered to. Businesses and investors can refer to these RBI guidelines and ensure full compliance with the FDI norms of the country.
Previously, a subsidiary company in India set up as a private limited company was required to have a specified minimum capital. However, with recent reforms in place, this stipulation has been eliminated. Although there is no minimum capital requirement, it is important that the company has adequate capital for conducting operations.
Transfer pricing is a crucial mechanism that safeguards the fairness of transactions conducted between a subsidiary and its foreign parent company. By ensuring that these transactions occur at market rates, transfer pricing effectively prevents any inappropriate profit shifting. This practice helps create a stable and consistent business environment for companies operating internationally, promoting transparency and accountability.
Shareholders are now required to pay taxes on dividends received from an Indian subsidiary. This change is because the Dividend Distribution Tax (DDT) is no longer in effect. This change ensures transparency and aligns with current tax regulations.
Yes, it can be identical to the parent company. However, usually “India” is added at the end to distinguish it from the main thing.

For incorporation of subsidiary of foreign company in India, essential documents include:

  1. Memorandum of Association
  2. Articles of Association
  3. Consent of Directors.
  4. Board Resolution from the Parent Company.

Note that if these documents originate from a foreign country, they require proper legislation to ensure compliance and authenticity.

The timeline for setting up subsidiary in India may vary based on the accuracy of the application filed and documents submitted. However, usually it takes approximately 15 to 25 days.
Certainly! In various sectors, such as defence, telecom, and banking, there are specific caps on Foreign Direct Investment (FDI). It’s highly crucial to refer to the latest FDI policy to obtain precise and up-to-date information regarding these caps. Staying informed about the policies governing FDI in different sectors can help ensure compliance and make informed business decisions.
Indeed, a subsidiary company in India is required to comply with Indian Accounting Standards. Additionally, these subsidiaries are subject to audit in accordance with the regulations set out by the Indian authorities. By complying with these standards and undergoing audits, subsidiaries can ensure transparency, accountability, and compliance with Indian regulatory requirements.
Yes, according to the regulations, at least one director of the subsidiary company is required to be a resident of India. The director needs to have lived in the country for more than 120 days in the last financial year.
Indeed, post-tax profits are eligible for remittance. However, it is important to note that repatriation of profits is subject to withholding tax. The rates of withholding tax can change depending on the Double Tax Avoidance Agreement (DTAA) between India and the relevant country.
When a subsidiary company in India broadens its operations, it is important to make changes in its primary business activities. For this modification to the Memorandum of Association is necessary. In addition to this, obtaining any required approvals or permissions may also be imperative. Making sure the subsidiary follows the law and regulations is important for it to succeed in a changing business environment.
As per the latest FDI regulations in India, 100% FDI is allowed in single-brand retail trading under the automatic route. However, for multi-brand retail trading, FDI is subject to certain conditions and required government approval.
We assist in setting up subsidiary companies throughout India. However, we have local teams to provide personalised assistance for subsidiary in Bangalore and subsidiary in Mumbai. Other than these locations, we provide localised assistance in Delhi, Noida, and Hyderabad as well.