Indian subsidiary

There is a lot of buzz among foreign companies / foreign individuals to start their operations in India and tap into one of the largest and fast growing market, and have access to some of the best and cost effective human resources in the world. A Foreign National (other than a citizen of Pakistan, Bhutan or Bangladesh) or an entity incorporated outside India (other than entity incorporated in Pakistan, Bhutan or Bangladesh) can invest and own Indian Subsidiary in India by acquiring shares of the company, subject to the FDI Policy of India. In addition, a minimum of one Indian Director who is a Indian Director and Indian Resident is required for incorporation of an Indian Company along with an address in India.

Investment and acquisition of equity shares of Indian Subsidiary can be broadly divided into two categories: Foreign Direct Investment (FDI) under Automatic route and investment under Government approval route. The automatic route requires no requirement of any prior regulatory approval for investment in equity shares of an Indian business and only post transaction filing/intimation with the Reserve Bank of India within 30 days of receipt of investment money in India and filing of prescribed documents and particulars of allotment of shares within 30 days of allotment of shares to foreign investors. Foreign Direct Investment of upto 100% is allowed under the automatic route in most activities/sectors in India. Investment in activities / industries where automatic route is not available can be made with the approval of the Government under the Government Approved FDI method. G K B & Associates can be your professional partner in India to get your New Company / Subsidiary in India started quickly and cost-effectively.

Advantages

Separate Legal Entity: Indian Subsidiary is a legal entity and a juristic person established under the Act. Therefore Indian Subsidiary form of organization has wide legal capacity and can own property and also incur debts. The members (Shareholders/Directors) of Indian Subsidiary have no liability to the creditors of Indian Subsidiary for such debts.
Perpetual Existence: Indian Subsidiary has 'perpetual succession', that is continued or uninterrupted existence until it is legally dissolved. Indian Subsidiary, being a separate legal person, is unaffected by the death or other departure of any member but continues to be in existence irrespective of the changes in membership.
Borrowing Capacity: Indian Subsidiary enjoys better avenues for borrowing of funds. It can issue debentures, secured as well as unsecured and can also accept deposits from the public, etc. Even banking and financial institutions prefer to render large financial assistance to Indian Subsidiary rather than partnership firms or proprietary concerns.
Easy Transferability: Shares of Indian Subsidiary limited by shares are transferable by a shareholder to any other person. Filing and signing a share transfer form and handing over the buyer of the shares along with share certificate can easily transfer shares.
Owning Property: Indian Subsidiary being a juristic person, can acquire, own, enjoy and alienate, property in its own name. No shareholder can make any claim upon the property of the company so long as the company is a going concern.
Limited Liability: Limited Liability means the status of being legally responsible only to a limited amount for debts of Indian Subsidiary. Unlike proprietorships and partnerships, in a limited liability company the liability of the members in respect of the company's debts is limited.

Process

Indian Subsidiary Company Incorporation –
G K B & Associates can incorporate a Indian subsidiary in 14 to 20 days, subject to ROC processing time.

Obtaining DSC & DIN –
Digital Signature Certificate(DSC) and Director Identification Number(DIN) is required for the proposed Directors of the Indian subsidiary Company. DIN and DSC can be obtained for the proposed Directors within 2-3 days.

Name Approval –
A minimum of one and a maximum of two proposed names must be submitted for RUN (Reserve Unique Name)to the MCA. Subject to availability, naming guidelines and MCA processing time, Name Approval can be obtained in 2 to 3 business days.

Company Incorporation –
Incorporation documents can be submitted to the MCA along with an application for incorporation. MCA will usually approve the application for incorporation in 5-77 days, subject to their processing time.

Documents Required

1. ID Proof and Address Proof (Aadhar) for Director. As ID proof PAN Card is Mandatory.
2. Latest utility bill (electric bill/telephone bill) or latest tax receipt/ownership deed of the property for the property to be used for registered office.

Frequently Asked Questions

What is an Indian subsidiary company?

An Indian subsidiary company is a company incorporated in India where a foreign company holds more than 50% of the shareholding. It operates as a separate legal entity under the Companies Act, 2013.

Why should a foreign company set up a subsidiary in India?

Setting up an Indian subsidiary allows foreign businesses to access India’s growing market, benefit from limited liability, hire locally, and enjoy tax and operational advantages. G K B & Associates provides complete advisory for smooth market entry.

What are the eligibility requirements to register an Indian subsidiary?

An Indian subsidiary requires a minimum of 2 directors (at least one must be a resident Indian), 2 shareholders, and a registered office address in India.

What documents are required for Indian subsidiary registration?

Key documents include passport and ID proofs of foreign directors, address proof, incorporation certificate of the parent company, board resolution authorizing investment, and registered office proof in India.

Can 100% foreign ownership be allowed in an Indian subsidiary?

Yes, 100% foreign ownership is allowed in many sectors under the automatic route. However, certain industries require prior approval from the Government of India. G K B & Associates ensures compliance with FDI guidelines.

Indian subsidiary