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The Indian subsidiary company is one whose interests are owned, controlled, or controlled by another company. The holding company and subsidiary company relationship can be determined using the preference share capital and paid-up equity share capital of the subsidiary company. It can be wholly or partially owned by another corporation.
Furthermore, a company that is owned 100 percent by another company is referred to as a Wholly Owned Subsidiary of the corporation that invested 100 percent in it.
The liability of Directors and members of the private limited company is limited to their shares. This means the company suffers from any loss and faces financial distress because of primary business activity, the personal assets of shareholders/Members/Directors will not be at risk of being seized by banks, creditors, and government.
Mostly, the life of the business doesn’t affect by the status of shareholders and even after the death of the shareholder the private limited company continues to exist.
In India, Foreign Direct Investment (FDI) is 100% allowed in several business activities/industries without any prior approval. But FDI is not allowed in Proprietorship or Partnership; LLP requires prior Government approval.
The scope of expansion is higher because it is easy to raise capital from a venture capitalist, financial institutions, angel investor, and the advantages of limited liability, the Private limited offer more transparency in the company.
The brand value of a company will get increased because employees feel secure in joining the private limited company, vendor feels secure in offering credit, investor feels secure in investing, the customer feels trust and confidence in a brand in buying company product or services because of the sound corporate structure. Many startup companies start with zero revenue and rapidly reaches to a multibillion-dollar company in just a few years just because of the high brand value of the company
An Indian Subsidiary registration process must include the following steps, which include that
• In order to start with incorporation of an Indian subsidiary company, two directors must apply for DSC (Digital Signature Certificate), and every one of the directors should apply for DIN (Director’s Identification No.).
• For an Indian Subsidiary registration process, the individual is also needed towards applying for the name of the company in Form INC-1.
Once the name approval is obtained from the ROC (Registrar of Companies), an individual is required to file –
Form INC-7 which is required for Application for Incorporation of Company (Other than One Person Company)
Form DIR-12 which is required for Particulars of appointment of directors and key managerial staff; and
Form INC-22 which is required for Notice of the situation along with Memorandum and Articles of Association of the Company.
• Once the filing of the incorporation documents is completed, payment of online ROC fees and Stamp duty must be done by the individual for an Indian Subsidiary registration process. (This is dependent on the authorized capital of the corporation).
• When the fees are paid, ROC validates the filed documents. Form INC-22, as well as DIR-12, is approved through the Straight-Through-Process (STP) and the ROC validates Form INC-7 in detail. The ROC might propose a few changes in the form of attachment.
• When the changes are affected and the ROC is satisfied, a Certificate of Incorporation is sent towards the individual by email.
From All Directors and Shareholders
For Proposed Registered Office (Residential or commercial)
Of course, the Indian Companies Act requires that there should be at least two shareholders and foreign companies hence must hold 99.99% of shares of an Indian subsidiary. Besides, minority balance holding is nominated and held under the Indian Companies Act in the name of an individual.
No. MoA and AoA which have been signed by an overseas national must be duly notarized/apostilled in the country of origin. This is as per the requirement of Rule 13(5) Company (Incorporation) Rules under the Companies Act, 2013.
No. It is not mandatory for a director/shareholder has to be physically present for incorporating an Indian Subsidiary
Yes. FDI guidelines issued by the government need to be adhered to prior to issuing shares to NRIs/Foreign Nationals.
Foreign investments made under an automatic route do not require any prior approval of the regulatory bodies set up by the Indian government. A post facto intimation is only required to RBI within 30 days of shares being allocated to overseas investors.
A Wholly Owned Subsidiary (WOS) is a business entity whose entire shareholding is in the hands of a foreign company..
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