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Indian Subsidiary

Forming an Indian Subsidiary is a strategic way for a foreign entity to enter the Indian market. It’s a private limited company incorporated in India where the parent foreign company holds a majority stake. This structure ensures limited liability for the parent company, provides operational control, and offers regulatory credibility within India. It requires a minimum of two directors and two shareholders.

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Indian Subsidiary Company Registration

Expanding your business into India by setting up a subsidiary can be a strategic move to access one of the world’s fastest-growing markets. An Indian subsidiary is a company where a foreign entity, or parent company, holds more than 50% of the total share capital. This structure provides a separate legal identity, limited liability, and direct access to the vast opportunities within the Indian market.

At FileMyFirm, we specialize in guiding foreign companies through the entire process of Indian subsidiary registration. Our team of experts provides end-to-end support, from navigating regulatory approvals to ensuring compliance with the Companies Act, 2013, and the Foreign Exchange Management Act (FEMA).

What is a Subsidiary Company?

A subsidiary, also known as a daughter company, is an entity controlled by a parent company (or holding company). The parent company holds significant ownership and influence, typically more than 50% of the subsidiary’s share capital.

In India, there are two main types of subsidiaries:

  • Wholly-Owned Subsidiary: The parent company owns 100% of the subsidiary’s shares. This is possible in sectors where 100% Foreign Direct Investment (FDI) is permitted.
  • Partially-Owned Subsidiary: The parent company holds more than 50% but less than 100% of the subsidiary’s shares.

Key Advantages of Indian Subsidiary Registration

  • Separate Legal Identity: A subsidiary is a distinct legal entity from its parent company, allowing it to enter into contracts, own property, and sue or be sued in its own name.
  • Limited Liability: The financial liability of the parent company is limited to its investment in the subsidiary, protecting its assets from the subsidiary’s debts.
  • Access to the Indian Market: It provides a direct and strategic entry point into India’s vast and competitive market, with opportunities for diversification and growth.
  • Perpetual Succession: The subsidiary’s existence continues uninterrupted despite changes in its directors, members, or ownership.
  • Tax Benefits: Indian subsidiaries may be eligible for specific tax incentives and can leverage concessional tax rates in certain sectors.
  • Access to Skilled Workforce: India has a large pool of skilled, English-speaking professionals, which a subsidiary can tap into for its operations.

Requirements for Indian Subsidiary Registration

To register a subsidiary company in India, the following requirements must be met:

  • Shareholders: A minimum of two shareholders is required. The parent company can be one shareholder, or two foreign nationals can hold the shares.
  • Directors: A minimum of two directors is mandatory, with at least one director being an Indian resident.
  • Registered Address: The company must have a registered office in India, which serves as its official address. A virtual office address can fulfill this requirement.
  • Company Name: The name must be unique and comply with the Companies Act. It is often a good practice to include the parent company’s name followed by “India Private Limited.”
  • No Minimum Share Capital: India does not impose a minimum capital requirement for company registration.

The Process of Indian Subsidiary Registration

The incorporation of a foreign subsidiary in India involves several key steps:

  1. Obtain DSC & DIN: All proposed directors must obtain a Digital Signature Certificate (DSC) and a Director Identification Number (DIN).
  2. Name Approval: Apply for a unique company name through the Ministry of Corporate Affairs (MCA) online portal.
  3. Draft MoA & AoA: Prepare the Memorandum of Association (MoA) and Articles of Association (AoA), which are the foundational legal documents for the company.
  4. File Incorporation Documents: Submit the required forms, including the SPICe+ form, along with the MoA, AoA, and other necessary documents to the Registrar of Companies (ROC) via the MCA portal.
  5. Obtain Certificate of Incorporation (COI): Upon approval, the ROC will issue a COI, which officially confirms the company’s legal existence.
  6. Apply for PAN & TAN: The company’s Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) are generated during the registration process.
  7. Open a Bank Account: Open a corporate bank account in the company’s name and deposit the initial share capital.
  8. Post-Incorporation Compliance: Complete other formalities such as GST registration (if applicable) and filing the necessary forms with the Reserve Bank of India (RBI) to report the foreign investment.

How FileMyFirm Can Assist You

Still unsure about how to register a subsidiary company in India? FileMyFirm simplifies the entire process. From helping you select a unique name and obtain essential DSCs and DINs to assisting with documentation and regulatory filings, we provide end-to-end support.

Our expert team ensures compliance with all relevant laws, including the Companies Act, 2013, FEMA, and Income Tax Act, 1961. With FileMyFirm as your partner, you can confidently and efficiently initiate and grow your Indian subsidiary business while we handle the legal and administrative complexities.

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