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Step Wise Guide to Establish a Subsidiary Company in India by a Foreign Corporation

A company may be easily registered by foreigners or by one or more foreign corporations as shareholders to an Indian company. However, the provisions of the Foreign Exchange Management Act (FEMA) must be completely complied with. The inflow of foreign exchange to be invested as capital in the business is known as foreign direct investment. The FDI is not permissible in proprietorship and partnership business.
The foreign investment in the shares of a company or capital of the LLP is 100% open under automatic route for most of the sectors, wherein no prior approval from the government is necessary, however, after entity registration in India a formal reporting to RBI is necessary within 30 days of capital infusion. We are known for quality advisory on FDI matters in India, and with proper documentation in place, a company with FDI can be incorporated within a week’s time.

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Important Conditions for FDI in a Company

Check FDI Limit

Most of the sectors are open for foreign direct investment in India under the automatic route, without any prior approval for incorporation of the company.

Business Visa

The directors/shareholders visiting India for signing documents must be on a Business Visa; otherwise, documents must be legalized/ attested.
Document From Mother/Holding Company (If Applicable) Document From Foreign Director /Shareholder
Certificate of Incorporation & AOA/MOA or Charter Document
Passport
List of Shareholders and Director of the foreign company
National ID Card
Board Resolution Approving incorporation of a Company in India
Address Proof (Telephone Bill / Utility Bill / Bank Statement)
Power of Attorney in the name of Authorised Representative
Business Visa in case the foreign person is in India

One Resident Director

One director of the company must be resident in India. A person is said to be a resident when he/she stays in India for at least 182 days during the FY.

Attestation / Apostille

All documents of foreign origin and those executed in a foreign territory need to be legalized by way of attestation by the Indian high commission or Apostille.
Proof Of Registered Office In India Of The Proposed Company Document From Indian Resident Director or Shareholder
Premises Proof (Ownership Papers/ Electricity/ Water/ Gas Bill)
PAN Card (Issued by Income Tax Department)
No Objection Certificate (NOC) from the owner of the premises.
Identity Proof (One From Voter ID Card/ Driving License/ Passport)
Address Proof (One From Bank Statement/ Electricity/ Telephone Bill)

Preparation & Documentation for Company Registration with FDI

Check FDI Limit of Your Sector – Preparatory Stage – 1

Generally, the foreign direct investment is open in most sectors, however, there are few sectors where it is restricted and in some sectors, FDI is not permitted. Click here to see the FDI Limit

Basic Documentation – Preparatory Stage -2

Perhaps the most important aspect of company registration with foreign shareholding in the documentation and its legalization. The list of documents required is provided above for your reference. We shall also require information in the Questionnaire For Company Registration.

Drafting of Government Forms and Documents – Preparatory Stage – 3

After we receive the complete set of basic documents we shall draft declarations as required under the companies act, 2013, Memorandum of Association (MOA), Articles of Association (AOA), and other documents as may be required on a case to case basis.

Legalization of Documents – Preparatory Stage – 4

All documents which are originating from a foreign country or which is signed/executed in a foreign country shall be legalized either through Indian Embassy or be apostilled as per Hague Convention. However, in case the foreign person comes to India with original documents on a Business Visa then attestation can be done in India.

Process & Timeline for FDI Company Registration in India

Application for Digital Signature of Shareholders/Directors – Day – 1

A digital signature is the equivalent of a physical or paper signature under the information technology act. As per the new process, all applications to the registrar of companies are filed in digital format which needs to be authenticated by the digital signature of the proposed shareholders and directors as the case may be. The filing process starts with the issue of a digital signature for all the promoters.

Name Reservation of Company – Day – 1-3

The name of the proposed company must be unique and should not resemble any existing company, LLP, Trademark, or any other business. The subsidiary of a foreign company can have the name of a foreign company with India as a name. Learn more on Name Reservation Rules

Filing for Company Registration – Day – 4

After the Name Approval of the company, we are ready to go and shall file the Spice 32 Form with the MOA, AOA, Promoters ID, and Address Proof. Along with other attachments, proof of registered address and NOC from the owner of the premises is also required.

Issue of Certificate of Incorporation by the ROC – Day – 5-10

The application for company registration is processed at Central Processing Centre at Manesar (Near Our Delhi Office) and if the ROC is satisfied with the information and documents filed, the Certificate of Incorporation is issued, which is conclusive proof of the registration of the company.

Approach Banker for Account Opening – Day – 11-15

After company incorporation, the Bank A/c has to be opened, wherein the FDI (foreign direct investment) must reach within 180 days of incorporation of the company with advance intimation to Banker. Please note that the new company can not start any of its business activities unless the capital has been received in India.

About Setindiabiz

Setindiabiz is an organized team of experienced CA, CS, & Lawyers, duly supported by a pool of trained accountants & paralegal staff that provides quality & affordable compliance services to startups & small businesses in India. The views, statements and recommendations expressed in this article or post are only for the sole objective of providing information, and it does not constitute professional advice or recommendation of the company. Neither the author nor the company or its affiliates accepts any liability for any loss or damage arising from any information in this article or any actions taken in reliance thereon.
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