Indian Subsidiary Registration
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Indian Subsidiary Registration – Process
Businesses employ various strategies to expand their operations. Among them, establishing branch offices or forming/acquiring subsidiary companies are effective methods. The latter is particularly advantageous when a company aims to create an independent brand or enter a new market segment. However, Indian subsidiary registration involves numerous procedural and compliance requirements. This guide offers a comprehensive understanding of Indian subsidiary incorporation and registration.
What is Indian Subsidiary Registration?
According to Section 2(87) of the Companies Act, 2013, a “subsidiary company” in relation to a holding company is one where the holding company:
- Controls the composition of the Board of Directors; or
- Controls more than one-half of the total voting power, either alone or with one or more subsidiary companies.
For registration, a subsidiary company must comply with the Ministry of Corporate Affairs regulations, similar to any other company.
Establishing a subsidiary is effective for expanding operations into new markets or product lines through:
- Majority stake acquisition in an existing company.
- Creation of a new company to launch new products or segregate existing operations.
Key requirements include:
- Minimum of 2 directors, with at least one being a resident director.
- No minimum capital requirement.
- At least two shareholders, with the holding company owning a minimum of 50% equity share capital.
Documents Required for Indian Subsidiary Registration
Necessary documents include:
- Passport size photos of directors and shareholders.
- PAN Card, Aadhaar Card, and identity proofs of directors.
- Address proof of registered office.
- Residential address proofs of directors.
- eMemorandum of Association and eArticles of Association.
- Additional documents for non-individual shareholders.
Indian Subsidiary Registration Process
To incorporate a new company:
- Obtain Digital Signature Certificates (DSC) for all directors.
- Obtain Director Identification Numbers (DIN) for all directors.
- Check and reserve the company name through SPICe+ form.
- File SPICe+ Form for incorporation, which includes various registrations and approvals.
Compliance Requirements for Indian Subsidiary
The subsidiary must fulfill standard Indian company compliances, including:
- Holding Annual General Meetings and Board Meetings.
- Filing audited financial statements and annual returns.
- Maintaining statutory registers.
- Disclosing related party transactions in the Board’s Report.
Compliance for Converting an Existing Company into a Subsidiary
In case of mergers or acquisitions:
- File specific forms like INC 28, PAS-3, etc., as required by law.
FAQs
Yes, a non-resident individual can be appointed as a director in an Indian subsidiary company. However, it is mandatory to appoint at least one Indian resident director for all companies in India.
In simple terms, a subsidiary company has its own separate legal identity, whereas a branch office acts as an extension of its parent company. The subsidiary company is an independent entity with its own distinct name, unlike a branch office.
Apostille is an attestation recognized by all member countries of The Hague Apostille Convention. Any document bearing an apostille stamp from a member country is valid and accepted in all other member countries. Apostille is required when incorporating a company involving foreign nationals. If a foreign national resides in a non-member country of the Hague Convention, their documents must be notarized by the Public Notary of that country and consularized by the competent authority.
In addition to the Companies Act, 2013, an Indian subsidiary company must comply with taxation laws, including the Income Tax Act, 1961, GST law, and Customs Law. Additionally, compliance with the provisions of the Foreign Exchange Management Act, 1999 may be required depending on the circumstances of the company. The applicability of other laws varies case by case.
The registration fees for an Indian subsidiary company vary based on the company’s specific requirements. With TrueConnect, you can register your subsidiary at competitive rates, ensuring timely compliance.
