When you are planning to set up an office in India, there are certain procedures that need to be followed. It can be confusing for business owners who are not aware of the details. This blog talks about the process of subsidiary company registration in India.
In the year 2021 more than 1,500 foreign companies have incorporated a branch office/ subsidiary company in India. and the data tells that this number is likely to be doubled in the year 2022.
The reason for this is many, such as Quick and easy process of registrations, Digitalization of processes, recent steps taken by the govt towards ease of doing business in India, Pre-approval route for foreign direct Investment, India being the fasted growing economy in the world and many more.
Before getting into the process of the subsidiary company registration let’s understand the basic requirements that need to be met for the subsidiary company formation in India.
Basic Requirements to Register a Foreign Subsidiary Company in India
- Require a minimum of 2 persons who can be a director of the subsidiary company (max 15).
- Require a minimum of 1 person who is a resident Indian and can be one of the directors of the Indian subsidiary company.
- Require an Indian address, which will act as a registered address of the subsidiary company.
If you meet the above requirements, you are eligible to register a subsidiary company of your foreign entity in India.
Let’s move ahead and understand the documents required for foreign company registration in India.
Documents Required to Register an Indian Subsidiary of Foreign Entity
The documents required are quite simple to understand
- Documents of the directors
- Documents of the foreign entity
- Documents of the Indian address
- Document of the Directors
There are two documents that are required of each director 1. Identity proof 2. Address proof.
- Address proof documents should not be more than 2 months old.
- Documents of foreign directors must be notarized and apostilled in their country.
- Identity Proof (require any one of the below listed document)
- Passport Copy (it is mandatory for foreign and Non-resident directors)
- Driving License Copy
- Election ID Copy
- PAN Card Copy (it is mandatory for Indian resident directors)
- Aadhar Card Copy
- Address proof (require any one of the below listed document)
- Bank Statement Copy
- Phone Bill Copy
- Electricity Bill Copy
- Any Utility Bill Copy
The foreign entity or parent entity needs to provide the documents as well, as the Indian company is going to be a subsidiary of the foreign entity.
- Documents of foreign entity must be notarized and apostilled (Indian embassy) in their country.
- Incorporation certificate copy
- Memorandum of Association Copy
- Article of Association Copy
- Passing a Board resolution for opening a subsidiary in India (we shall provide the format)
- Bank Statement/ Utility bill copy as a proof of address
The documents of the Indian address which will act as a registered address of the company. This address can be a residential address as well. It is not mandatory that your team should work from this address.
- Rental agreement/lease deed /sale deed (required any 1 of these)
- Latest Electricity bill/water bill/ phone bill / utility bill (required any 1 of these)
- NOC from the property owner
Once you have all the above-mentioned documents, you are good to go ahead and start the registration process of the foreign subsidiary in India.
Process of the foreign company registration in India
Now as you are aware of the basic requirements and documents required to incorporate a subsidiary company in India. let’s understand the process and timeline for the same.
Step 1: Application for DSC and DIN of the Directors
The first step in the incorporation process is to apply for the DSC and DIN of the directors.
DSC stand for Digital Signature Certificate: it is an instrument through which digital documents can be signed. It is mandatory for all the directors to have a DSC. It is issued by government-certified agencies. It is a secure and authentic way of signing government related documents electronically.
DIN stands for Director Identification Number: it is a unique identification number allotted to an individual who is appointed as a director of the company. All the directors of a company will have a unique DIN number allotted to them.
If a person is a director in another company and holds a valid DSC and DIN already, then there is no need to apply for the same again.
This process takes 1-2 days of time, if any one of the directors already holds a DSC and DIN this step can be skipped.
Step 2: Passing a board resolution in the foreign entity
The foreign entity needs to pass a board resolution stating that, the company’s board of directors have approved and agreed upon opening an Indian subsidiary of the foreign entity.
This board resolution will be used in the next step “the Name application of the Indian subsidiary”. Here is the format of board resolution.
Please note that this board resolution along with the other documents which are stated above needs to be notarized and apostilled in the nearest Indian embassy.
Here is the list of Indian embassies present all over the world – List of Embassies of India.
Step 3: Application for Name Reservation
In this step, we will apply for the name reservation of the subsidiary company. Please note that the name must be unique not already been trademarked and should not contain phrases and words that are blacklisted by the RBI.
There should be a word or phrase which follow the Unique Component of the name which describes or indicates the main business of the Company. For Example: Tech/ Technologies/Internet/ Chemical, etc.
A Private Limited Company Should Compulsorily have a Suffix Private Limited (Pvt. Ltd.) at the end of its name.
For an XYZ technology company, the name can be:- XYZ Tech India Pvt. Ltd or XYZ Technologies India Pvt ltd.
Once applied for the name reservation of the company, it takes 2 days to get it approved. If for some reason the name gets rejected, we need to apply for the same with a different name.
Step 4: Drafting of MOA, AOA
Once the name of the subsidiary is approved, we will have 20 days of window to file for Incorporation.
In these 20 days, we need to draft the Memorandum of Association and Article of Association of the subsidiary company and submit the directors’ documents to the Ministry of corporate affairs.
In these 20 days, the other documents of the parent company along with the directors’ documents needs to be notarized and apostilled.
If someone fails to provide these documents within 20 days, then we need to start over from the name reservation process. However, Recently MCA has added one feature to extend the validity of the name to a maximum of up to 60 days.
Applicants can reserve their approved name for the next 60 days, for reserving the name the applicant needs to pay an additional fee for the same.
Step 5: Apply for the PAN and TAN of the company
Once step 4 is completed we need to apply for PAN and TAN of the company
PAN stand for Permanent Account Number: it is a ten-character alphanumeric identifier, issued by the Indian Income Tax Department. It is mandatory for businesses in India to have a PAN Number.
TAN stands for Tax Deduction and Collection Account Number: it is a 10-digit alphanumeric number required to be obtained by all companies who are responsible for deducting or collecting tax.
In India employer is responsible for deducting tax from the employee’s salary and paying it to the government. Hence TAN is mandatory.
For ease of doing business, govt is providing registration of ESI, EPFO, PF, PT and selection of their intended Banker in the incorporation form itself. You make use of this feature to speed up the post-incorporation process.
Step 6: Issue Certificate of Incorporation along with PAN and TAN
In this step, the government will issue the Incorporation certificate of the Indian subsidiary, along with the PAN and TAN of the company. By using these documents, you will be able to open a Bank account in any Indian Bank of your choice.
So, the registration of the foreign subsidiary in India has competed. What’s next?
Read this for the next steps: Post Incorporation steps for a foreign subsidiary company.
The process of registration of a subsidiary company in India is a very simple process. One can easily register a subsidiary in India in a period of 30 days. The whole process can also be completed in a period of 15 days if all the documents are in order.
We hope you enjoyed reading our article on how to register a subsidiary company in India. We know how useful it can be to have a subsidiary in India, particularly for businesses that frequently work with the country.
For more information on subsidiary company registration in India, or for any other business-related services, please contact us anytime at firstname.lastname@example.org or click here. We are happy to help you with the process and any questions you may have!