A Guide To Foreign Subsidiary Company Compliance In India | Ebizfiling

  Introduction 

 

India is a land of opportunities and a skilled workforce, as one would agree. Starting a business in India and investing was never so easy, inexpensive and quick. Doing business in India is getting easier day by day due to e-governance and simpler procedures. Companies who intend to start business operations in India can start doing registration of Indian Subsidiary Company. A Subsidiary Company is commonly known as a sister company. It is also said to be a company whose control lies with another company. In this blog let us understand about the Subsidiary Company in India, the prior requirement for starting it, the step by step procedure for registering with documents required to be included with the registration application.

 

 What is a subsidiary company? 

 

A company that is owned wholly or partly by another company is often referred to as a subsidiary company. A parent company or holding company is the term given to the parent company that owns the subsidiary. When a company takes control over the Board of Directors of a subsidiary company and possesses more than 50% of the total share capital, such company is referred to as the parent company. It is defined under section 2 (87) of the Companies Act, 2013.

 

 Prior requirement for starting an Indian Subsidiary Company 

 

There are some pre-requisites for starting an Indian Subsidiary Company in India/ Indian Subsidiary Company Registration in India, which are as follows:

 

• The company must have a minimum of two directors, of which one should be residents of India.

 

• The company must have a minimum of two shareholders for the Indian Subsidiary.

 

• The company with no minimum requirement of share capital.

 

• The company must rent a business place in India.

 

• The company must get permission for business activity the Subsidiary Company wants to do in India.

 

 Registration of Subsidiary Company- Step by step procedure 

 

The same procedure is used to incorporate an Indian subsidiary as it is for a Private Limited Company Registration in India or Public Limited Company. The applicant company must be aware of the steps required by the authority (MCA) to incorporate a company. The business must be registered with the ROC.

 

Step 1: Collect all the required documents of the foreign company.

 

Step 2: Decide the name for the Subsidiary Company in India.

 

Step 3: Drafting of AOA and MOA for the Subsidiary Company.

 

Step 4: Application for subsidiary registration in the prescribed form i.e. SPICe+ Form:

 

• Spice+ for is divided into two parts:

 

Part A: Apply for the name reservation of the company in Part A of the form Spice+ It can be used for getting the name approval of the proposed Company and also for filing Company registration in one single step.

 

Part B: In Part B of the Form Spice+, apply for the following services:

 

1. Incorporation

2. DIN allotment

3. Mandatory issue of PAN

4. Mandatory issue of TAN

5. Mandatory issue of EPFO registration

6. Mandatory issue of ESIC registration

7. Mandatory issue of Profession Tax registration(Maharashtra)

8. Mandatory Opening of Bank Account for the Company and

9. Allotment of GSTIN (if so applied for)

 

Step 5: Open a Bank Account in India for transaction.

 

 Documents required for registration 

 

The documents required for company registration in India are similar to as required Subsidiary Company registration-

 

A. Company related documents:

 

• The draft of Articles of Association and Memorandum of Association.

• If the property is rented, the lease agreement must be provided as proof of address; if the property is owned, a copy of the ownership documentation must be provided.

• Copy of utility bills.

• A copy of the promoter company's resolution.

• Copy of capital structure of the company

• A copy of the Foreign Corporation's Certificate of Incorporation.

 

B. Directors and shareholders related documents:

 

• Directors and designated shareholders must have a Director Identification Number (DIN) and a Digital Signature Certificate (DSC).

• Shareholder and director identification and address documentation.

• Photographs of the Directors and Shareholders.

• First Directors' Investments in Other Entities.

• Directors' and Shareholders' Declaration.

 

 Advantages of registering Subsidiary Company in India 

 

So let us discuss the benefits of registering as a Subsidiary Company in India:

 

• The government's "made in India" strategy offers both domestic and international investors a significant opportunity.

• India is rich with a large labour pool and admirable levels of judicial transparency.

• Direct investment into Indian companies through an Indian subsidiary is simple for foreign nationals.

• To increase investment in “Make In India”, the government is providing incentives.

• The "Ease of Doing Business" policy of the government aids in turning India into a center for manufacturing facilities.

• Young and productive generations contribute to the management and profitability of businesses.

 

 Annual Compliances  

 

The Companies Act, the Income Tax Act, the FEMA rules, and the transfer pricing guidelines must all be followed by all Indian subsidiary companies. Annually, they must submit an income tax return to the income tax department, an annual return to the registrar of companies, and other required files to the reserve bank of India, the stocks and exchange board of India, etc. However, the need depends on the number of workers, turnovers, and the sectors.

 

 Conclusion 

 

A company that wants to grow across geographies and industries will have to create subsidiaries. Subsidiaries let the holding company expand out to other areas, industry sectors, and nations by serving as an additional set of arms to the main body. An Indian subsidiary company is legally considered to be an Indian company and is obligated to follow all regulations that are relevant to Indian companies.