A company in India that operates as a subsidiary is essentially a sister company or a subsidiary of its parent company. The entity exercising control over it is referred to as the parent or holding company. The parent company oversees the subsidiary, whether in part or in full control.
In this blog, we shall see the details of the procedure of Indian subsidiary company registration. This includes information on the necessary documentation, the various types of subsidiaries, and the procedures involved in its establishment.
Meaning of Subsidiary Company
In the business sector, a subsidiary company is its own legal entity, under the ownership of a parent company.
It’s important to be noted that a subsidiary company, particularly one linked to a foreign parent company, functions independently as a distinct legal entity. As such, it is obligated to adhere to the regulations and compliances of the country in which it is situated or registered.
Advantages of Indian Subsidiary Company Registration
Before going into the procedure of Indian subsidiary company registration, let us look at its advantages. When considering the establishment of an Indian subsidiary company and subsidiary company registration, there are several advantages in terms of business compliances. The following key benefits apply in the context of an Indian subsidiary:
1. Independent Legal Structure: The Indian subsidiary operates as an independent and separate legal entity regulated under Indian commercial legislation.
2. Transfer of Shares: Shareholders have the flexibility to transfer or exchange shares to another party or individual by completing a share transfer form and a share certificate.
3. Acquire Property in India: As an independent structure, the subsidiary is permitted to acquire properties in India.
4. Incorporation with Foreign Direct Investment: Indian subsidiary companies can seamlessly incorporate with foreign direct investment, which is widely permitted across various economic activities in the country.
Types of Subsidiaries in India
Under the revised Companies Act of 2013, an Indian subsidiary is characterised by a foreign legal entity owning a minimum of 50% of the total share capital. This definition extends to clarify that the foreign company possesses legal rights and authorities concerning the structure of the board of directors of the subsidiary company.
Documents Required for Indian Subsidiary Company Registration
The important list of documents needed to undergo the procedure of Indian subsidiary company registration are as follows:
1. For Office Address:
- Office Address proof (Electricity bill or rent agreement)
- Latest self-attested electricity bill in case of rented accommodation
2. For Indian Nationals:
- Pan card (compulsory)
- Address proof (latest Electricity bill or rent agreement)
- Latest self-attested electricity bill in case of a rented firm
- Photo ID proof (passport or driving licence)
3. For Foreign Nationals:
- Passport (mandatory)
- Address proof (electricity bill, telephone bill, latest bank statement or passbook, or rent agreement in case of rented accommodation)
- Latest electricity bill (must be attested by the Indian Consulate)
- Photo ID Proof like Government licence or any document clearly displaying the full name of the applicant, a photo with clear resolution, and date of birth.
Minimum Requirements to Incorporate an Indian Subsidiary Company
The minimum requirements needed for the procedure of Indian subsidiary company registration includes:
1. At least Two Directors
2. Two Shareholders
Procedure of Indian Subsidiary Company Registration
Once the minimum requirements for the incorporation of an Indian subsidiary company, as given previously, are satisfied, the owners can initiate the following procedure of Indian subsidiary company registration:
1. Digital Signature Certificate (DSC) Application:
Minimum two directors must apply for Digital Signature Certificates.
2. Director’s Identification Number (DIN) Application:
All directors are mandated to apply for Director’s Identification Numbers.
3. Name Application Procedure:
Apply for the name of the company in Form INC-1, ensuring uniqueness from other company names.
4. Name Approval from ROC:
Upon successful approval of the name from the Registrar of Companies of the Ministry of Corporate Affairs, proceed to the next steps.
5. Submission of Documents:
File the following forms online:
- Form INC-7: Application for incorporation of the company (other than a one-person company).
- Form DIR-12: Particulars of appointment of directors and key managerial personnel.
- Form INC-22: Memorandum of Association of the company along with the notice of the situation clause.
6. Payment of Fees:
Pay the required fees to the ROC online, including the related stamp duty based on the authorised capital of the subsidiary company.
7. Verification of Documents:
ROC verifies all filed documents uploaded in the application.
8. Approval through STP:
Forms INC-22 and DIR-12 are approved through the Straight-Through-Process (STP).
9. Verification of Form INC-7:
ROC verifies Form INC-7, scrutinising the application for incorporation in detail.
10. Recommendations and Confirmation:
The Registrar of Companies may propose alterations to the form or attachments as needed. Once these modifications are implemented, and the ROC is content with the application and document compliance, the process advances.
11. Issuance of Certificate of Incorporation:
Lastly, Certificate of Incorporation is made available applicant through email.
By following the prescribed procedure of Indian subsidiary company registration diligently and ensuring the completeness of all required documents, potential delays from the ROC can be avoided, facilitating the smooth and successful incorporation of the subsidiary company.
Final Thoughts
The procedure of Indian subsidiary company registration involves essential steps such as obtaining Digital Signature Certificates and Director’s Identification Numbers, applying for a unique company name, and submitting requisite forms to the Registrar of Companies. The careful verification process, payment of fees, and adherence to statutory requirements contribute to the successful incorporation. The given process expedites the approval of certain forms, streamlining the overall registration process. The issuance of the Certificate of Incorporation marks the culmination of this process, signifying the official establishment of the Indian subsidiary company. Adhering to this comprehensive procedure ensures a smooth and timely registration, facilitating lawful business operations in the Indian market.
