Starting an Indian Subsidiary is the most accessible and easy mode for setting up business in India by foreign companies. The Government of India allows 100% FDI in most of the industries when set up as a company.
| Company Details | |
| Act | No specified Act |
| Registration Requirement | No |
| Number of members | Only 1 |
| Separate Legal Entity | No |
| Liability Protection | Unlimited |
| Statutory Audit | Not mandatory |
| Ownership Transferability | No |
| Uninterrupted Existence | No |
| Foreign Participation | Not Allowed |
| Tax Rates | Low |
| Statutory Compliances | Less |
Tags: incorporate, subsidiary, foreign, company, starting, business, india
Starting an Indian Subsidiary is the most accessible and easy mode for setting up business in India by foreign companies. The Government of India allows 100% FDI in most of the industries when set-up as a company. This also becomes a reason for foreign nationals and entities to end up their search on private company structure to establish their business.
An Indian structure is also beneficial as it is a centralized structure in place and governed by Companies Act, 2013. Withholding the majority or whole portion of stocks, all you need is one resident director and a place of business in India. However, it is simplified to set-up and run business, these companies must assess pertinent provisions of law. The Indian subsidiary of a foreign entity is also popularly known as a foreign company in India.
When compared to other business structure, the entry to Indian business sphere is easy as a private company. Apart from liberal norms, the set-up is a hassle-free deal as a company. Incorporation process and post-registration steps are now simplified with online processes and one window processing.
By registering a subsidiary in India, the foreign nationals or entities establish a permanent place of business and a legal entity in India. A company registered in India has separate legal identity than the promoters and the stockholders.
Although being a foreign person, this structure helps the promoters to control over the operations and activities in a strategic manner. With at least one Indian resident director, the foreign entities benefit from the indirect control and supervision.
The ultimate goal of setting a foreign branch happens to be an expansion of the business. A limited liability is an added advantage when it comes to entering in the whole new market. Where you increase the brand value across the globe, you also secure your liability with this structure.
PAN Card of shareholders and Directors. Foreign nationals must provide a valid passport.
Aadhar card and Voter ID/ Passport/ Driving License of Shareholders and Directors.
Telephone Bill /Electricity Bill/ Latest Bank Account Statement of Shareholders and Directors
Latest Passport size photograph of Shareholders and Directors.
Electricity Bill/ Telephone Bill of the registered office address in India
No Objection Certificate to be obtained from the owner(s) of registered office
Rent Agreement of the registered office should be provided if any
In case of NRI or Foreign National, documents of director (s) must be notarized or apostilled
It is to be provided on the letterhead of the company (apostilled or notarized)
Full address of the principal place of business of the foreign entity
Name and address of the person (Authorized Representative) who shall receive legal documents on behalf of the company
Details of opening and closing of a place of business in India on earlier occasion
Mainly it builds the company brand and preferably be a coined word
The second part of the name should suggest the business activity of the company
Name of the company must end with “Private Limited” as a suffix
What are the minimum requirements to set-up an Indian subsidiary?
An Indian subsidiary is formed as a Private Limited Company and to register same, following requirements must be fulfilled:
1. Minimum 2 directors shall be appointed, out of which one must be resident in India.
2. Minimum 2 shareholders are required for this registration. Here, an individual may become shareholder and director at the same time.
3. A place of business in India must be provided as a registered office address.
What are the FDI Guidelines for Foreign Nationals in a Private Limited Company?
What are businesses in which foreign nationals or companies can’t invest?
How to register a wholly owned subsidiary?
What is the minimum capital requirement?
How to reserve the company name? Can we apply with name of foreign entity?
The name of a company should be formulated as mentioned in the above section. The applicants can provide a maximum of 2 names with their preference order under the RUN form. The names provided should comply with the provisions of the Act or regulations.
You may apply with the name of the foreign entity to create a relation; however, the one has to check the availability of the name before making an application.
Whether is it compulsory to appoint an Indian director?
Whether physical place of business is required for setting up business in India by foreign companies?
Does anyone have to be physically present while online company registration in India?
Are there any further regulatory requirements after company is registered?
What are the Annual Compliance requirements to be fulfilled by a Private Company?
Which documents are required to be submited for filing of ARF and FCGPR under executive & premium package?
What is the due date of filing Foreign Liabilities and Assets (FLA) with RBI?
What is the role of Accountants and Auditors in Indian Subsidiary?
| Business Structure | Tax Rate | Effective Tax rate |
|---|---|---|
| Domestic Company: | (Base Rate) | (Base rate + surcharge + CESS) |
| Not availing any exemptions or incentives | 22% | 25.17% |
| Manufacturing companies incorporated after 01st October,2019 and not availing any incentives or exemptions | 15% | 17.16% |
| Availing any exemptions or incentives- turnover up to 400/- crore during FY 2017-18 | 25% | 25%+ surcharge +4% CESS (*Surcharge varies as per the income tax slab) |
| In any other case | 30% | 30%+ surcharge +4% CESS (*Surcharge varies as per the income tax slab) |
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