How to start a Subsidiary Company in India?

Process for establishing a subsidiary company in India when an Indian company and a foreign company wish to do so

A sister firm is another name for a subsidiary. It is also referred to as a firm under the supervision of another business. The Parent Company is the business that oversees the subsidiary. The Parent Company may have full or partial control over its subsidiary company. When a subsidiary firm is set up properly, the parent company can diversify by trying out a new industry. However, the requirements for establishing a subsidiary business in India vary depending on whether the parent firm is an Indian parent company or a foreign parent company. In this article, let’s talk about how foreign and domestic companies can establish an Indian Subsidiary. Even a foreign company can easily establish a subsidiary company in India.

What is a Subsidiary Company?

“A company that is owned entirely or in part by another corporation is often referred to as a subsidiary company. A parent company or holding company is the name given to the owner firm that owns the subsidiary. When a firm controls the make-up of the Board of Directors of a subsidiary company and possesses more than 50% of the total share capital, that company is referred to as the parent company.

How Do I Start an Indian Company’s Subsidiary?

• The procedure is the same for a private limited company registration when an Indian company wants to establish a subsidiary company in India.
• The only thing to keep in mind is that you must acquire a Board Resolution and NOC from the Indian Parent Company if you want to maintain the same name for your subsidiary company.

Documents Needed for an Indian Parent Company’s Subsidiary Company

• Photograph of all the Directors
• PAN Card of all the Directors
• ID Proof of all the Directors (driver’s license, passport, or voter ID)
• Utility bills for the address, including the electricity bill proof of the registered office
• self-attested residential address proof of each partner (not older than two months) (electricity bill, most recent bank statement, and mobile bill)

How Do I Start a Foreign Parent Company’s Subsidiary Company?

• The term “Indian Subsidiary” is used primarily when referring to a subsidiary company of a foreign parent company.
• In order to establish an Indian subsidiary company in India with the same name as the parent company, a foreign parent company located in a country other than India, such as the United States, Canada, the United Kingdom, Singapore, Malaysia, Australia, Indonesia, or any other country in the world, must first obtain the parent company’s board resolution and no-objection certificate (NOC). Both documents must be notarized and apostille.
• There are numerous advantages for foreigners who set up business in India.
• India is an excellent business location since it has the world’s fastest growth rate and the world’s sixth-fastest growing worldwide economy.

Requirements for starting an Indian subsidiary in India

• At least two directors are required, one of whom must be an Indian resident.
• Two shareholders are required.
• There is no minimum share capital requirement
• Business Place in India (locations can be rented or virtual).
• Permissible Business Activity

Advantages of establishing an Indian subsidiary company in India

• The government’s “make in India” strategy offers both domestic and international investors significant opportunity.
• Direct investment into Indian corporations through an Indian subsidiary is simple for foreign nationals.
• To stimulate investment in Make In India, the government is providing incentives.
• The “Ease of Doing Business” initiative of the government aids in turning India into a hub for manufacturing facilities.
• With a big worker pool and high levels of judicial transparency, India is wealthy.
• Young and productive generations contribute to the management and profitability of businesses.

Documents needed for foreigners to register an Indian subsidiary company in India

• Photograph of each Director and shareholder
• PAN cards are required for all Indian shareholders and directors.
• All Directors’ Apostille ID Proof (Driver’s Licence, Passport, Voter ID)
• Utility bills, such as an electricity bill, must be no more than two months old to serve as the Registered Office’s address verification.

Note :All documents need to be apostille or notarized in the case of an Indian subsidiary company of a foreign parent company.

How to Open an Indian Subsidiary by a Foreign Company or Register a Subsidiary Company of an Indian Parent Company

Step 1: Gather all the documents

Step 2: Choose a name for the subsidiary company

Step 3: Drafting the AOA and MOA for the subsidiary company.

Step 4: Subsidiary Registration Application in the Prescribed Form (SPICe+ Form)

Spice+ for is split into two sections:

• Part A: Fill out Part A of the Spice+ form to request the firm name reservation. It can be used to register a company simultaneously and get permission for the proposed company’s name.
• Part B: Submit applications for the following services in Part B of the Form Spice+:

1. Incorporation
2. DIN allotment
3. Mandatory issue of PAN
4. Mandatory issue of TAN
5. Issue of an EPFO registration is required.
6. Issuance of ESIC registration is required
7. Registration for the profession tax is required (Maharashtra)
8. Opening a bank account for the business and receiving a Allotment of GSTIN (if so applied for)

Step 5: Open an Indian Bank Account

Conclusion

Establishing a subsidiary company in India may be a profitable and profitable venture for both indigenous and foreign entrepreneurs. While the procedure may require overcoming different legal and regulatory regulations, it offers significant benefits, including limited liability protection, access to a large consumer market, and potential tax benefits. To ensure a seamless and effective subsidiary setup, it is critical to perform thorough market research, get experienced legal and financial assistance, and follow all relevant procedures. With India’s expanding economy and business-friendly environment, establishing a subsidiary can pave the way for long-term business expansion and success in the country.