Indian Foreign Subsidiary Registration

Due to the rising demand of businesses, the Indian government and MCA have made the registration of a foreign subsidiary in India very smooth and easy. The whole registration process is now hassle-free with minimal documentation requirements. This in turn has helped India with a lot of foreign investments. Therefore, international businesses are now investing in it.

Why do foreign countries want to invest in India?

With the rapid growth of the population of around 1.2 billion in India, the country has turned into one of the major and most promising markets in the world. It is considered to be a country with the largest democracy thus attracting a lot of people and international businesses to invest and grow. Businesses around the world want to tap these massive business opportunities to grow and sustain in the market. The following article discusses how a foreign subsidiary can legally register in India and expand its market and operation. For this, we first need to understand what a foreign subsidiary company is.

What do you mean by a Foreign Subsidiary Company?

A foreign subsidiary company is a kind of company where 50% or more of its equity shares are held or owned by another company that is incorporated or situated in another foreign country. In such a case, the said foreign company is called the parent company or the holding company. 

Let’s look at the procedure to register a foreign company’s subsidiary in India. Below mentioned is the process. 

In case of incorporation of a Private Limited Company in India

1. Firstly, supporting documents are required from the client of a minimum of two directors of the company. For this, one director should be an Indian or Indian Resident. 
2. Once the supporting documents are available, the company needs to approve the Digital Signature Certificate and Director Identification Number (DIN) from the Ministry of Corporate Affairs, 
3. Once DIN and DSC are available, a request for company name availability will be made to the Ministry of Corporate Affairs.
4. The Memorandum of Association (MOA) will be drafted within 60 days from the name approved by the Ministry of Corporate Affairs to complete the incorporation process.
5. There is a requirement of a minimum of two shareholders for a private limited company. Hence, the holding company in a foreign country must pass a Board Resolution for the incorporation of a Company in India and for the subscription of shares of the proposed Private Limited Company.

By the law, the foreign company can hold up to 99.99% of the shares of the Indian Company while 0.01% of the issued shares of the Private Limited Company can be held by an Indian, in trust with the foreign Company. 

1. Once the incorporation process is completed and an incorporation certificate is obtained, the bank accounts can be obtained with the approved licenses. 
2. Furthermore, the Reserve bank of India will be indicated to make the necessary requirements for Foreign Direct Investment in India through the automatic route.

Documents required for registration of foreign company’s subsidiary in India

The following are some of the unique requirements for incorporating a Private Limited Company with Foreign Directors: 

1. Requirement of an identity and address proof of the Director’s passport or any other license issued by the Government that contains a photo, name in full, and date of birth is acceptable. 
2. Documents containing address proofs like Passport, Driving License, Bank Account Statement or Utility bill containing name and address. 
3. All these documents shall be photocopied and need to certify such documents as a true copy by the Indian Consulate in the country of the holding company or must be apostilled. 
4. If the documents are not in English, then a certified translation document is also required. 

All the above-stated documents are required to be sent to India mostly through courier. Furthermore, the holding company in a foreign country for the incorporation of a subsidiary in India must also pass a Board Resolution.

Conclusion:

As discussed in the article, slowly and steadily India is emerging and is becoming one of the major hubs for core investment in the country. International businesses invest through Foreign Direct Investment and are looking for more opportunities. Therefore, the Ministry of Corporate Affairs and the Indian government have made the registration and starting of foreign companies in India a slow and smooth process, so that any business big or small, can start and invest in its business.