Indian Subsidiary Registration
Foreign investors are eager to start their businesses in India as the country offers tons of opportunities due to the rapidly growing market. Any foreigner outside the citizens of Pakistan and Bangladesh or a business built and operating outside of India can invest in the Indian market. Indian Subsidiary owned by any foreign company, the Companies Act, 2013 regulates the process for the registration of an Indian Owned Company.
The 1991 economic liberation was the result of direct foreign investment in India. The subsidiary is also called a sister company and the participating company is called a parent or hosting company. The parent company controls the company wholly or partially.
The registration of a subsidiary company in India is fully regulated by the Companies Act, 2013. According to the Companies Act 2013, a subsidiary company is a foreign organization or parent organization with a value of at least 50% of the total share capital. The company under which it operates must comply with the laws of the country in which it plans to establish the business.
AK Taxes can assist with Indian Subsidiary registration while providing appointed directors and registered office service in India.
Registration Requirement Company under Indian
- At least two directors are needed to bring the company together
- One of the directors must be an Indian citizen
- No minimum wage is required to install an Indian Sub-Company in India.
- The Indian Subsidiary Company is required to have at least two shareholders.
- Shareholders can be individuals or organizations or a combination of both.
- The parent company is required to hold 50% of the total share capital.
- Director’s ID number for all directors.
Documents required to obtain registration with the Indian Subsidiary Company
The foreign requester must submit the following documents:
- Driver’s license
- Proof of identity of country of residence
The Indian director must submit the following documents:
- PAN card
- Aadhar Card
- Any bill.
The foreign company representative must submit the following documents:
- Driver’s license
- Proof of identity of country of residence
Management and the shareholding structure of the Indian Subsidiary Company
Step1: When we receive a request for AK taxes our business advisor reaches out to you, understands your business needs, and suggests you the most appropriate type of business for your business.
Step 2: Dedicated relationship manager assigned to the business, the relationship manager will collect all the required documents. These documents will be uploaded simultaneously to government portals.
Step 3: To set up a Private Limited Company in India, the following documents need to be submitted.
- Supporting documents, a minimum of two directors (one needs an Indian director who is also an Indian resident).
- Acceptable name of company.
Step 4: AK Taxes will assist the applicant to obtain a DSC and a Director ID (DIN) number from the Department of Business Affairs.
Step 5: After the name has been approved, it is necessary to write the Organization Memorandum and submit it within 60 days to complete the submission process.
Step 6: A minimum of two shareholders is required in a limited private company. Therefore, the foreign holding company must comply with the decision of the Investment Board in India and the registration of shares of the proposed company.
Step 7: The Foreign Company may hold approximately 99.99% of all shares in the Indian Company, while 0.01% of the shares issued by the company may not be controlled by the Indian at the discretion of the foreign company.
Step 8: Once the company is merged, you are required to open a bank account and obtain the required licenses. At the same time, it is necessary to make a fill with the RBI to show India’s foreign investment in the automatic route.
Why Join the Indian Subsidiary?
- A registered partner may not apply to a court in any court against the firm or other partners for the exercise of any contractual right or the right granted by the Co-operatives Act.
- No liability to enforce an agreement arising from an agreement may be entered into in any court by a company or on behalf of a company against any third party unless that company is registered under the Co-operatives Act.
- The unregistered firm or any of its partners may not seek redress or other proceedings in a dispute with a third party.
- Therefore, it is best to register the Partnership sooner or later.
Foreign Direct Investment
External Direct Investment in a Limited Company Allowed to foreign entities under FDI guidelines. FDI in India falls under two categories of the default route and the authorization route. Currently, 100% FDI is allowed in most sectors, freeing up limited areas and limitations.
If automatic authorization is not granted you need to obtain prior approval from the Indian government foreign investment promotion board. In addition, citizens or organizations from Bangladesh and Pakistan can only invest under an authorized route. FDI can be equity tools Indian companies can issue equity shares, equity shares, and flexible loans but this is subject to practices and guidelines.
Shares of shares in Private Limited may be issued under FDI and must have a fair value. If the NRI incorporates the company or entries into the organization’s memorandum during the company period the shares may be issued at fair value.
Here is a list of industries that require government approval for investment by a foreign company or outsider.
- Oil sector (excluding private oil refining sector), natural gas, LNF pipelines.
- Investing companies in infrastructure.
- Defense and strategic industries
- Atomic minerals
- Printing media
- Postal services
- Courier services
- Satellite design and operation
- Integrated township development
- The tea sector
- Manufacturing companies.
Management and stock structure of the Indian Subsidiary Company
The Private Limited Company is required to have at least two shareholders and two directors. The shareholder may be any person or business organization. Foreigners may be directors of the Private Limited Company but it should be noted that at least the director must be a resident of India.
There is no need for an Indian Director to own shares in a company. Most foreign companies prefer to include an Indian company with three directors, two of whom are foreigners and one is an Indian Director.
100% shares of an Indian company can be held by a combination of foreign companies or citizens. One business or individual cannot own all the shares of a sub-Indian company.
Compliance with the laws of the Indian Subsidiary Company
There is some compliance with the companies under Indian India that they have to comply with by authority.
Companies Act, 2013 – A company based in India will be required to comply with compliance under the Companies Act, 2013.
Foreign Exchange Management Act, 1999 – It is required to comply with Indian foreign exchange laws if a foreign company with them plans to establish in India.
RBI Compliance – India’s subsidiary foreign company must also comply with RBI compliance.
Income Tax – All companies currently operating in India must file Income Tax rebates. It is a requirement that the Indian subcontracting company must comply with the tax rates for each.
ROC and MCA Annual Rewards – Companies established in India must complete an annual compliance with the Registrar of Companies and the Department of Business Affairs.
SEBI- If a company under India registers its securities in a transaction, then compliance must be complied with in accordance with the rules of the Securities Exchange Board of India.
What are the penalties for non-compliance?
Penalty for Failure to Provide a Chartered Accountant Report
Businesses that enter into international trade are required to obtain a report from a Chartered Accountant. Failure to provide a report from CA could result in a penalty of Rs. 1 lakh.
Penalty for Not Keeping Documents
Suppose an entity that fails to maintain documents or fails to report or even provide incorrect information may incur a penalty of 2% of the total payment in the event of non-compliance.
Penalty for Not Producing Documents
- Tax authorities in any process may require any person involved in international trade to provide any related information or document.
- The document must be delivered within 30 days from the date of receipt of the notice.
- Failure to provide may incur a penalty equal to 2% of the total stated payment for each failure.
Frequently Asked Questions
To install a limited private company, you need at least two people. A limited private company must have at least two directors and may have up to fifteen directors. A minimum of two shareholders and up to 200 shareholders are permitted in the limited liability company.
A director must be over 18 years of age and must be a natural person. There are no restrictions on citizenship or residency. Therefore, even outsiders can become directors of Indian Private Limited.
You Can Start a Private Company At Any Price. However, money must be paid to the Government by issuing shares worth Rs.1 lakh [Authorized Money] at the time of incorporation of the Company. There is no need to prove proof of investment during the consolidation process.
The address in India where the Company’s registered office will be located is required. The properties may be commercial / industrial / residential where communication from the MCA will be obtained.
No, you will not need to be in our office or from any office to be included in the Private Limited Company. All documents can be scanned and emailed to our office. Some documents will need to be mailed to our office.