Subsidiary Company in India- Process when Indian Company and Foreign Company wishes to start a Subsidiary Company in India

Subsidiary Company is commonly known as a Sister company. It is also said to be a company whose control lies with another company. The company that controls the subsidiary is called the Parent Company. The Parent Company can control it’s Subsidiary Company completely or partially. When you Create a subsidiary company correctly, it lets the parent company diversify by trying out a new business. However, the criteria for opening a Subsidiary Company in India depends upon where the parent company is situated i.e. Indian Parent Company and Foreign Parent Company. In this article let us discuss the procedure of opening a Subsidiary Company in India by both Foreign Company and Indian Company. In India it is easy to set up a Subsidiary Company even by a Foreign Company

What is a Subsidiary Company?

“A subsidiary company is typically a company that is wholly or partly owned by another company. The Owner Company that owns the subsidiary is known as a parent company or a holding company.” A company is said to be the Parent Company when such company has control over the composition of the Board of Directors of Subsidiary Company and secondly the Parent Company has holds more than 50% of the total share capital.

How to Start a Subsidiary Company of an Indian Company?

• When an Indian Company wishes to start a Subsidiary Company in India the process is the same as the Private Limited Company Registration process.
• The only thing that one needs to keep in mind is that if the Indian Parent Company wishes to keep the same name for its Subsidiary Company then you need to obtain Board Resolution and NOC from the Parent Company.

Documents Required for Subsidiary Company of an Indian Parent Company

• Photograph of all the Directors
• PAN Card of all the Directors
• ID Proof of all the Directors (Driving License/Passport/Voter ID)
• Electricity Bill or any other utility bill for the address proof of the Registered Office
• Self Attested Residential Address Proof of all the partners (Electricity Bill/Latest Bank Statement/Mobile Bill) (not older than 2 months)

How to Start a Subsidiary Company of a Foreign Parent Company?

• When we talk about a Subsidiary Company of a Foreign Parent Company, that would be called an Indian Subsidiary specifically.
• When a Foreign Company situated in any of the country other than India such as the USA, Canada, UK, Singapore, Malasiya, Australia, Indonesia or any other country of the world wishes to start an Indian Subsidiary company in India, with the same name as the parent company, then the Foreign Parent Company needs to obtain Board Resolution and NOC from the Parent Company. Both the documents need to be apostille and Notarized.
• There are a good number of advantages for foreigners to start a company in India.
• India is very good for business as India is the fastest growing country and it is also 6th in growing international economy.

Pre-requisites of starting an Indian subsidiary in India 

• Minimum two directors (One of them should be an Indian Resident)
• Minimum Two shareholder
• No Minimum Requirement of Share Capital
• Business Place in India (Can be rented or virtual Business place)
• Permissible Business Activity

Benefits to register an Indian Subsidiary Company in India

• Government’s make in India initiative gives important opportunities for Indian and foreign investors.
• For foreign nationals it is effortless to invest directly in Indian companies through an Indian Subsidiary.
• The government is offering incentives to encourage investment in Make In India.
• Government’s “Ease of doing Business” initiative helps  in making India a hub for manufacturing units.
• India is rich with large labour pool and admirable levels of judicial transparency
• Young and efficient generations help to run a business and make it successful ventures.

More on Benefits: Benefits of investing in India from an NRI / Foreigner’s perspective

Documents Required for Indian Subsidiary Company registration in India by foreigner

• Photograph of all the Directors and shareholders
• PAN Card of all the Indian Directors and shareholders
• Apostile ID Proof of all the Directors (Driving License/Passport/Voter ID)
• Electricity Bill or any other utility bill ( not older than 2 months) for the address proof of the Registered Office.

Note: In the case of Indian Subsidiary Company of a Foreign Parent Company, all the documents needs to be apostiled / notarized.

Steps to register a Subsidiary Company of an Indian Parent Company / Open an Indian Subsidiary by a Foreign Company

Step 1: Collect all the Documents

Step 2: Decide the name for the Subsidiary Company

Step 3: Drafting of AOA and MOA for the Subsidiary Company

Step 4: Application for subsidiary registration in the prescribed form i.e. SPICe+ Form:

• Spice+ for is divided in two two parts:
• Part A: Apply for the name reservation of the company in Part A of the form Spice+. it can be used for taking the name approval of the proposed Company and also for filing Company registration in one go.
• Part B: In Part B of the Form Spice+, apply for the following services:

1. Incorporation
2. DIN allotment
3. Mandatory issue of PAN
4. Mandatory issue of TAN
5. Mandatory issue of EPFO registration
6. Mandatory issue of ESIC registration
7. Mandatory issue of Profession Tax registration(Maharashtra)
8. Mandatory Opening of Bank Account for the Company and
9. Allotment of GSTIN (if so applied for)

Step 5: Open a Bank Account in India

FAQs on Starting an Indian Subsidiary Company in India

What is an ideal form of business structure for an Indian Subsidiary Company in India?

For an Indian Subsidiary Company in India the ideal structure shall be a Private Limited Company. However, if a foreign individual wishes to start a company in India in his Capacity he can start a Private Limited Company or an Limited Liability Partnership. While for an NRI, the ideal form of business structure shall be Private Limited Company, Limited Liability Partnership or One Person Company.

I am a Director of a Company in the USA, I wish to start an Indian Subsidiary of a US Company, Can I become a Director in Subsidiary Company in India as well?

Yes, you can start and become a director of an Indian Subsidiary of the USA Parent Company. However, it is mandatory to have one Indian Resident Director to be appointed in an Indian Subsidiary.

I am an NRI residing in the UK, can I become a Director in an Indian Subsidiary?

Yes, an NRI can start and become a director of an Indian Subsidiary.

Can a Non-resident Indian open a One Person Company in India?

Yes, as per the resent amendments, now an NRI can start a One Person Company in India.

I am an individual residing in the Canada, I wish to start an Indian Subsidiary in India, but I heard there are certain FDI and FEMA policies to be followed if I wish to invest in India?

Yes, when a foreign national or company wishes to open an Indian Subsidiary Company in India, there are some FEMA compliance that needs to be followed but those are very easy and straight forward.

Also, in private Limited Company, 100% Foreign Direct Investment is allowed that means any foreign entity or foreign person from Canada or any part of the world can directly invest in a Private Limited Company.