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Indian Subsidiary registration
India, with its booming economy and rapidly growing market, has become a hotspot for foreign companies looking to expand their business operations. Establishing an Indian subsidiary is one of the most popular routes for foreign companies to enter the Indian market. This method allows a foreign company to have a legal entity in India, providing the flexibility to operate independently while still being connected to the parent company. In this blog, we will explore the process of Indian subsidiary registration, its requirements, benefits, necessary documents, and frequently asked questions.
Requirements for Indian Subsidiary Registration
Before diving into the registration process, it is essential to understand the basic requirements needed to establish an Indian subsidiary:
- Directors:
- At least two directors are required to register an Indian subsidiary, one of whom must be an Indian resident. The other can be a foreign national or an Indian resident.
- All directors must obtain a Director Identification Number (DIN) and Digital Signature Certificate (DSC).
- Shareholders:
- An Indian subsidiary can be wholly owned by a foreign company. The subsidiary must have at least two shareholders, which can include individuals or corporate entities.
- Company Name:
- The name of the subsidiary must be unique and adhere to the naming guidelines prescribed by the Ministry of Corporate Affairs (MCA).
- Registered Office:
- The subsidiary must have a registered office in India, which will serve as the official address for all communications and legal matters.
- Capital Requirements:
- There is no minimum capital requirement for registering an Indian subsidiary. However, it is advisable to have a reasonable amount of capital to cover initial operational costs.
Why Choose Indian Subsidiary Registration?
Establishing an Indian subsidiary offers several advantages that make it a preferred choice for foreign companies:
- Limited Liability:
- The liability of the shareholders is limited to the amount invested in the company. This ensures that the parent company’s assets are protected in case of any legal or financial issues faced by the subsidiary.
- Ease of Operation:
- An Indian subsidiary operates as an independent legal entity, allowing the parent company to exercise control over its operations while complying with Indian laws and regulations.
- Access to Indian Market:
- Registering a subsidiary in India provides direct access to one of the largest and fastest-growing markets in the world. This enables foreign companies to capitalize on the immense consumer base and tap into the country’s economic growth.
- Tax Benefits:
- India has a comprehensive network of Double Taxation Avoidance Agreements (DTAA) with several countries, which helps reduce the tax burden on foreign companies operating in India.
- Reputation and Credibility:
- Having a registered subsidiary in India enhances the credibility and reputation of the foreign company, as it demonstrates a long-term commitment to the Indian market.
Documents Required for Indian Subsidiary Registration
The registration process involves submitting various documents to the Registrar of Companies (ROC). Here is a list of essential documents required for Indian subsidiary registration:
- For Directors and Shareholders:
- Passport: A copy of the passport is mandatory for foreign directors and shareholders. The passport must be notarized and apostilled.
- Address Proof: A recent utility bill, bank statement, or driving license showing the current residential address.
- Photograph: A passport-sized photograph of each director and shareholder.
- DIN and DSC: Director Identification Number and Digital Signature Certificate for all directors.
- For the Registered Office:
- Address Proof: A copy of the rent agreement, if the office space is rented, or the ownership documents, if it is owned by the company.
- No Objection Certificate (NOC): A NOC from the owner of the premises, allowing the company to use the address as its registered office.
- For the Parent Company:
- Certificate of Incorporation: A copy of the Certificate of Incorporation of the parent company, duly notarized and apostilled.
- Board Resolution: A resolution passed by the parent company’s board of directors authorizing the establishment of the Indian subsidiary.
Memorandum of Association (MOA) and Articles of Association (AOA): Drafted according to Indian laws, these documents define the company’s objectives, structure, and operational guidelines.
Conclusion
Registering an Indian subsidiary is an excellent way for foreign companies to establish a presence in the Indian market. It offers numerous advantages, such as limited liability, ease of operation, access to the Indian market, and tax benefits. By understanding the requirements, gathering the necessary documents, and following the registration process, foreign companies can smoothly set up their subsidiary in India and begin operations. Whether you are a small startup or a large multinational corporation, establishing an Indian subsidiary can be a strategic move to expand your global footprint and tap into the opportunities offered by India’s dynamic economy.
FAQs for Indian Subsidiary Registration
The registration process typically takes between 15 to 30 days, depending on the timely submission of all required documents and the approval process by the ROC.
Yes, a foreign national can be appointed as a director, but at least one director must be an Indian resident.
No, there is no mandatory minimum capital requirement. However, the capital should be sufficient to cover the initial operational costs.
An Indian subsidiary is required to file annual returns, financial statements, and tax returns with the ROC and the Income Tax Department. It must also comply with other statutory requirements, such as holding annual general meetings (AGMs) and maintaining proper accounting records.
Yes, an Indian subsidiary can repatriate profits to the parent company, subject to the applicable tax regulations and foreign exchange management laws.
The corporate tax rate for an Indian subsidiary is 25% for companies with an annual turnover of up to INR 400 crores. For companies with a higher turnover, the tax rate is 30%. However, tax benefits under DTAA may apply.