Documents required for a Wholly Owned Indian Subsidiary
A. Parent Company Documents:
- Certificate of Incorporation : Proof of the parent company’s legal existence.
- Board Resolution : Approval to set up an Indian subsidiary.
- ID & Address Proof : Passport, utility bill, or bank statement of authorized partners.
- DIN : Unique ID for subsidiary directors.
B. Documents for Indian Entity
- Company Name Approval : MCA approved unique business name.
- MoA & AoA : Define company goals, operations, and management.
- Office Address Proof : Lease agreement, ownership papers, or NOC from the landlord.
- Tax Registrations : Apply for PAN, TAN, and GST
Basic Criteria to Start a Wholly-Owned Indian Subsidiary
Only if you possess the following criteria shall you easily start a Wholly-Owned Indian Subsidiary:
- Minimum Directors : At least 2 directors are required.
- Minimum Shareholders : The company must have at least 2 shareholders.
- Minimum Capital: A minimum paid-up capital of ₹1 lakh is required.
- Foreign Directors Allowed : NRIs, PIOs, Foreign Nationals, and Foreign Citizens can be directors.
- Essential Documents : Directors must have a Digital Signature Certificate (DSC) and Director Identification Number (DIN).
Challenges while setting up a Wholly-owned Indian Subsidiary
- Costly and Takes Time : Setting up a business requires significant money, time, and effort for legal procedures, approvals, and operations.
- Language Difficulties : Communicating with local employees, clients, and authorities can be challenging if there’s a language barrier.
- Understanding Local Rules : Navigating complex legal and tax regulations requires expertise to ensure compliance with local laws.
- Building Business Setup : Setting up offices, hiring staff, and arranging resources can be a lengthy and costly process.
- Facing Local Competitors : Competing with established local businesses requires strong market research and effective strategies.
Conclusion
A wholly owned foreign subsidiary in India can be established if it qualifies for 100% Foreign Direct Investment (FDI) approval. Previously, prior approval from the Reserve Bank of India (RBI) was required, but now, under the Automatic Route, FDI is allowed without needing government or RBI approval.
Suggested Read :
RBI Rules for Foreign Subsidiary Companies
Holding and Subsidiary Company in India
Indian Subsidiary Foreign Shareholder
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