Start Subsidiary Company
Remotely, Online & EasilyUnlock the potential of India's markets with your wholly-owned subsidiary company. We provide comprehensive legal assistance in establishing a subsidiary company in India, helping you understand the eligibility, process, cost, and documents.
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What's Included :
- Digital Signature for Two Persons
- DIN for Two Persons
- Name Search & Approval
- Drafting of MOA & Articles
- Filing of Spice Plus Form
- Certificate of Incorporation
- E-PAN & E-TAN of Company
Everything in Basic Pack +
- Bank A/c Opening Support
- INC-20A Filing
- GST Registration
- MSME Registration
- Dedicated Relationship Manager
Everything in Silver Pack +
- Capital Remittance Support
- FDI Declaration filing
- RBI Firms Portal Registration
- Preparation of FDI Documents
- Filing of FC-GPR to RBI
- Allotment of UIN from RBI
Government fee, stamp duty & taxes on actual. For additional promoter USD 50 each.
Setindiabiz is your preferred for India Entry Services.
Setindiabiz provides comprehensive legal and consultation services for foreign businesses starting operations in India. Our services include advising on incorporation, corporate law, and tax matters. We also provide legal support to the Indian subsidiary in accounting, tax filing, and payroll and protect the IPR.
India Entry Options
The Process of Incorporation of an Indian Subsidiary by a foreign company is 100% online, and there is no need to visit India for this purpose. India is an open economy that welcomes investors worldwide. The Make in India initiative perfectly aligns with a favourable tax structure of just 15% for manufacturing activities. The legal framework in India allows foreign investors to do business in India either as a foreign company by setting up a Liaison, Branch, or Project office in India with prior approval of the RBI or by setting up an independent corporate structure and registering a local company or LLP in India. You can find all the options in the table below.
| As a Foreign Company (With permission of RBI and Central Govt) | By Setting up an Indian Corporate Entity (registration before ROC) |
|---|---|
Foreign Direct Investment in India (FDI) Limits
The FDI (Foreign Direct Investment) plays an important role in the growth and expansion of the Indian economy. The FDI Policy of India permits the FDI in most sectors under an automatic route, wherein no specific permission is required before the establishment of a company or Indian subsidiary. The companies that are incorporated under the automatic route are required to file simplified FDI Reports in the form FC-GPR. However, certain strategic sectors have sectoral caps, and foreign investments beyond the specified limit are allowed, subject to prior approval from the central government.
| Automatic Route of FDI | Government Approval Route of FDI |
|---|---|
| Sectors of strategic importance
|
Note: FDI from countries that share a land border with India
In 2020, the government of India introduced a major change in the FDI policy, wherein restrictions were placed on the FDI originating from some countries that share land borders with India. These countries include Pakistan, Bangladesh, Bhutan, Nepal, China, and Afghanistan. The FDI originating from these countries, whether directly or indirectly, requires prior permission from the government of India. Read more on Press Note 3 of 2020
Eligibility for Subsidiary Company Incorporation for Foreigner
The first step in setting up a wholly owned subsidiary company in India by a foreign company/entity is to analyse its eligibility to Incorporate a WOS. The following are the minimum eligibility requirements for Indian Subsidiary Registration. Do not hesitate to contact us for help!
Parent Company Standing
The applicant company must be an incorporated legal entity such as a Joint Stock Company or an LLP in the home country. Documents such as a Certificate of incorporation, articles and board resolution are required.
Two Representatives
The parent company must nominate two signatories, both of whom can be foreigners or non-residents of India, to represent 100% of the shareholding. The Authorised Representative or nominee needs to be subscribed to the MOA.
One India Resident Director
A minimum of two directors is required, and the maximum number of directors is capped at fifteen (15), with at least one being a resident of India. This resident director ensures compliance with local laws and regulations.
Permitted Activities
The company's main object or proposed activities must be legal in India. Most sectors are open to 100% FDI; however, we recommend that you check the permitted FDI in a specific sector or industry.
Capital Requirements
No minimum or maximum level of capital is prescribed under the law. Therefore, the promoters are free to decide the level of capital that the subsidiary would need to run the Indian operations
Unique Name Selection
Choose a distinct name for your subsidiary that complies with the Companies Act 2013 and is not already registered by another entity. Usually, the parent name is approved by adding India to the name
Timeline for Indian Subsidiary Incorporation
Day One
First Phase Documentation
Documentation plays a significant role in incorporating the WOS in India. Basic documents from the parent company and its authorized signatory or nominee are required. Based on the scanned copies of documents, the team will draft the first phase document necessary for filing the name reservation application. The papers shall need to be legalized/attested.
Day two
Digital Signature of Promoters
The time required to obtain a digital signature (DSC) for the company may take 1-2 days, depending on the availability of the proposed shareholder or director.
1st - 3rd Day
Name Search & Main Objects Drafting
We conduct the name availability search within a few hours; however, as we have experienced, discussing the proposed name availability with the promoters and drafting the MOA may take time.
4th Day
Name Availability Application
After receiving the phase one documents, we apply to reserve the proposed company's name with the ROC. The application is filed in Part A of the Spice Plus form.
7th Day
Second Phase of Documentation
After the name of the proposed Indian subsidiary is approved by the ROC office, we will draft the Memorandum of Association & Articles and other prescribed documents. The second phase of the document would also need legalization/attestation.
By 15th Day
Filing for Incorporation of WOS
After we receive the legalized documents of phase two, the application for the incorporation of the wholly owned subsidiary company in India is filed in Spice Plus form, where the MOA, AOA, Identity and address proof of promoters, and proof of registered office are attached. This process can take one to two days.
By 21st Day
Incorporation Certificate
After submitting the Spice Plus form, the Registrar of Companies office checks the application and the attached documents. If everything is found in order, the Incorporation Certificate is issued.
List of Documents For the Indian Subsidiary Company Incorporation
Proper documentation plays a significant role in quickly incorporating a subsidiary company in India. The following documents are required to set up an Indian Subsidiary from the parent company, its authorised signatories, and the proposed first directors.
Documents of Patent or Holding Company
The incorporation certificate for a foreign company is issued by the company registrar's office or another designated government office. This certificate serves as proof of the legal entity. In some countries, the incorporation certificate is also referred to as a charter.
The Articles of Association of the company act as its bylaws and are included in the incorporation documents. If there are any changes or modifications to the articles, the most recent version must be submitted.
Any utility bill that is not older than sixty days and is in the name of the company, including the complete address, is accepted as proof of the company's address. Examples of acceptable documents are a telephone bill, electricity bill, or bank statement.
The list of directors for the holding company must be submitted on the company's letterhead and certified by any director of the company. This list should include the following details for each director: full name, nationality, and residential address. We will provide you with a draft format for this purpose.
The shareholders list must be prepared on the letterhead of the holding company and duly certified by a director. It should include the details of every shareholder holding 10% or more of the stake in the holding company. We will provide the format for this purpose.
Documents from Proposed Directors/AR
A clear and recent front-facing colour photograph is required from each director, authorized signatory, or nominee of the holding company for the proposed wholly owned subsidiary, preferably against a white background.
The passport is mandatory for foreign individuals, while it is optional for Indian citizens, provided they are residents of India.
Aadhar is mandatory for all Indian persons. Ensure that the aadhar number is linked to the PAN Card and mobile number for OTP-based verification during incorporation.
The Income Tax Department in India issues the PAN Card, which is a mandatory document for Indian promoters to submit to the LLP. A No PAN Declaration is filed if foreign partners do not have one.
Every person acting as director, individual shareholder, or authorized representative of the nominee of the holding company must submit their current residential address proof that is not over two months old. Any of the documents below are acceptable address proof
- Bank Statement
- Electricity Bill
- GAS Bill
- Telephone Bill
- Mobile Bill
Documents of the Registered Office
According to Section 12 of the Companies Act 2013, every company in India is required to maintain a registered office where statutory records are kept. When incorporating a wholly-owned subsidiary, proof of the office address must be submitted in the form of a utility bill dated within the last sixty days. Examples of registered office addresses include:
- Electricity Bill
- Telephone Bill
- GAS Bill
- Mobile Bill
The owner of the premises where the registered office is located must provide a No Objection Certificate (NOC) for the use of their premises as the registered office address of the Indian subsidiary of the foreign company. We would provide the NOC Format.
Incorporation Of Communication Address:
In India, the Indian subsidiary can be registered at a “communication address” even before securing a permanent office. This temporary address helps you start the formalities while searching for the ideal premises. It’s essential to remember that within 30 days of incorporation, you need to establish a physical “registered office” in the same state and file Form INC-22 with the Registrar of Companies (ROC) to report the official address change.
Incorporation Process of an Indian Subsidiary
We manage the complete process of incorporating a subsidiary company for foreign corporations in India. The following are the key milestones required to establish a subsidiary in India.
Step - 1
Parent Company Authorization
The board of directors of the parent company must approve and authorize the establishment of a subsidiary in India. They also need to designate a signatory who will sign the Memorandum of Association (MOA) and Articles of Association (AOA) for the new Indian company. A board resolution and a power of attorney duly signed and attested in the home country of the parent company is submitted during the incorporation of the new subsidiary.
Step - 2
Name Approval for Indian Subsidiary
The Indian subsidiary may use either a new name or the parent company name followed by "India." However, the proposed name must not infringe on someone else's trademark in India. The application for reservation of the desired name is filed in Part A of the Spice Plus form to the ROC.
Step - 3
Drafting of MOA, AOA, & Declarations
The Memorandum of Association (MOA) outlines the primary objectives and proposed activities for which the Indian subsidiary is established. In contrast, the Articles of Association (AOA) detail the internal rules governing the Board. During the incorporation process, certain declarations must be signed by the promoters. We assist you in drafting all of these necessary documents.
Step - 4
The Legalization of the Documents
The Memorandum of Association (MOA), Articles of Association (AOA), and declarations signed in a foreign country need to be legalized. The legalization process varies depending on the country. For Commonwealth nations, a notary public is sufficient; however, for other countries, an apostille under the Hague Convention, obtained at the Indian Embassy, is necessary. However, if the signatory visits India on a business visa, attestation can be done in India.
Step - 5
Filing of Spice Plus Application to ROC
The process of incorporating a company in India is entirely online and straightforward. It involves filing an application with the Registrar of Companies (ROC) using the prescribed "SPICE Plus" form. Along with the form, scanned copies of several documents must be attached, including the Memorandum of Association (MOA), Articles of Association (AOA), declarations, and the promoters' identity and address proofs. After completing the application, the promoters must digitally sign it. Additionally, the application needs to be attested by a practising Chartered Accountant, Company Secretary, Cost Accountant, or an Advocate practising in a High Court.
Step - 6
Issue of Incorporation Certificate
The Registrar of Companies (ROC) issues a Certificate of Incorporation after a satisfactory review. The certificate provides conclusive proof of the company's incorporation and includes the CIN, PAN, and TAN numbers.
Attestation or Legalisation of Foreign Documents
The documents that are signed or executed overseas need to be attested before they can be used for filing with the Registrar of Companies, RBI or any other government department. Such documents include a certificate of incorporation & articles of foreign company, passport and address proof of foreign directors, MOA, AOA, and certain declarations for the Indian subsidiary incorporation. The method of legalisation may vary depending on the location of the documents.
| Method of Legalisation | Applicabilit |
|---|---|
| Notary Public | Applicable in the countries which are part of the Commonwealth. Please refer to the List of Commonwealth Countries to know more. |
| Apostille | The Apostille is a simplified method of legalising documents for countries that are members of the Hague Convention. |
| Indian Embassy or Consulate | If your country is not a member of the Commonwealth Nations and is also not part of the Hague Convention. The only option for legalising your documents is to present them to the Indian Embassy for attestation. This option is a last resort and can be exercised in all scenarios. |
Frequently Asked Questions
A wholly-owned subsidiary in India is incorporated under the provisions of the Companies Act 2013 and is considered a separate legal entity with a distinct existence. The majority of the subsidiary's shares are owned by its parent company, also known as a holding company. In cases where the holding company owns 100% of shares in the Indian Company, it is known as a Wholly Owned Subsidiary.
The main difference between a subsidiary and a branch office in India is their legal status and taxation. A subsidiary is at par with any domestic company and is subject to the same taxes and regulations. A foreign company's branch office is an extension of its foreign holding company. The branch of a foreign company is subject to higher Income Tax
Yes! According to India's FDI policy, foreign companies are allowed to invest and hold 100% shares in their Indian subsidiaries in most of the sectors. You can refer to the recent FDI policy to know whether a 100% foreign shareholding is permitted in your industry.
The Reserve Bank of India (RBI) issues notifications or press releases that serve as guidelines for Foreign Direct Investment (FDI) limits across various sectors in the country. These notifications specify the permissible Limits and modes of FDI approval. For instance, press note 3 of 2020 is so significant that it has restricted the inflow of FDI from neighbouring countries such as China.
No minimum or maximum amount of capital must be infused in the Indian Subsidiary of a foreign corporation. This means that you have the flexibility to decide the capital level of the Indian Subsidiary company. However, we always advise evaluating the immediate capital requirement for the initial setup and meeting the expenses until the Indian subsidiary starts earning its own revenue.
Transfer pricing is a crucial mechanism that safeguards the fairness of transactions between related parties, such as the subsidiary and its foreign parent company. The transaction must be carried out at arm's length between the associated entities.
Companies in India are no longer required to pay tax on the declaration and distribution of dividends (DDT). However, the dividend in the hands of the recipient shareholder continues to be taxable
Yes, it can be identical to the parent company. However, "India" is usually added at the end to distinguish it from the parent or holding company.
Yes, according to the provisions of the Companies Act, 20213, at least one director of the subsidiary company must be a resident of India and must have lived in the country for more than 120 days in the last financial year.
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 requires government approval.