Moving a section of your business to India as a foreign businessperson is undeniably quite a task. Motivational factors like building your company’s brand value, taking advantage of the sales opportunity, and primary cost-saving reasons may seem encouraging. But thoughts like how to go about the complexities of legal laws of a new country and registration compliances will be a little daunting.
In this article, we will address your concerns about understanding the process of setting up a subsidiary company in India. And how to navigate the government laws and registrations of setting up subsidiary company in india.
What is a subsidiary company?
A subsidiary company is a company owned by the parent company and can be of two types: a WOS (wholly owned subsidiary) and a partially owned subsidiary.
- When the parent or holding company makes a 100% investment and owns 100% of the subsidiary, it is known as a WOS (Wholly Owned Subsidiary).
- To be qualified as a partially owned subsidiary, the parent company needs to have at least 50% stock ownership.
- Under Indian legislation, a subsidiary is treated as a separate legal entity.
Subsidiary company registration in India
As a parent company holder, you would be keen to know about the rules and regulations of forming a separate legal entity in India? A subsidiary company in India can be registered as a private limited company.
Privately limited company- This type of privately held small entity can be a small or medium-sized business. The business entity limits the owner’s liability to their shares, the number of shareholders to a count of 50, and restricts the shareholders from publicly trading shares. The cost of forming a legal entity with all additional registrations cost $2500 (approximately 1,94,425 rupees) to $5000 (3,88,851 rupees) approximately.
When you want to incorporate a WOS (wholly owned subsidiary) company in India, you need to make a 100% FDI ( Foreign Direct Investment) in India through an automatic route. This will be possible when 100% FDI is permitted. However, a former approval from the Government and RBI is not required and the FDI is allowed without these permissions.
The documentation process for foreign company registration in India
To incorporate a subsidiary company in India, your subsidiary will need two directors and two shareholders. One of the directors should be an Indian resident and both should have a DIN (Direct Identification Number) to avoid any administrative time delays. The shareholders can be individuals or businesses. Your company has to comply with the rules and regulations of the Companies Act, 2013.
The documents required for registration of a subsidiary company are a pan card, photo ID proof, and address proof for an Indian national. For a foreign national, a passport is followed by photo ID proof and address proof, both of which have to be certified by an Indian consulate. The minimum requirement to incorporate a private limited company is two directors and shareholders.
Other formalities consist of getting a digital signature online, reserving a business name through the Registrar of Companies, filing an incorporation application online, and creating a company seal. If you wish to protect your company brand, you will have to get a trademark registration as the company formation procedure.
Your parent company can be located anywhere, but if you wish to incorporate a company in India, the subsidiary company has to be registered in India to have a corporate address. In order to continue smooth business operations after the formation of an entity, it has to be registered with multiple government agencies.
Remunance, your business ally in subsidiary formation
Once you have figured out the documentation requirements, it is advisable to get in touch with a PEO agency. Or with business setup consultants in India who will offer you their expertise in foreign company incorporation in India.
At Remunance, we ideally concentrate on small and medium-sized enterprises that wish to set up their local business in India. The Founder of our company has done extensive research and devised a strategic and compliant PEO model for the Indian market.
Remunance makes it convenient for you
Remunance addresses your concerns regarding company formation and complete compliance. We ensure you end-to-end support with proper government authority registrations to kickstart your subsidiary smoothly without any hassles or security issues. Our deep knowledge of the laws and Indian pulse here will be instrumental in setting up your company conveniently under the provisions of the Company Act and getting it approved by the Reserve bank of India as well. We will efficiently handle all your administrative headaches, tax payments, and HR management.
We hope this information helps in answering your concerns about entering into new territory and going forward with the Indian compliances without any hesitation.