Open a Subsidiary in India
Updated on Wednesday 22nd November 2017
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Foreign legal entities may set up subsidiaries in India and the legislation in this country provides for two types of subsidiaries, depending on the capital owned by the foreign company. Thus, when starting a company in India which is represented by a foreign legal entity, the investors may choose to incorporate a wholly-owned subsidiary or a subsidiary company. Our team of specialists in company formation in India can assist with the legal requirements related to the registration of a subsidiary.
Types of subsidiaries in India
According to the Companies Act 2013, a subsidiary is defined as a company in which a foreign legal entity owns at least 50% of the total share capital. The definition also states that the foreign company has legal rights on the structure of the board of directors of the subsidiary.
As mentioned above, there are two main options when registering a company in India as a subsidiary. Investors may establish a wholly-owned subsidiary, which designates the fact that the parent company owns 100% of the subsidiary’s shares. This option is available only for the business sectors which allow 100% foreign direct investments and our team of agents in company registration in India may provide further assistance on this matter.
The other option refers to the subsidiary company, in which the parent company controls at least 50% of the subsidiary’s capital.
Registration requirements for Indian subsidiaries
Under the Indian legislation, the subsidiary is treated as a separate legal entity. The Indian subsidiary falls under the regulations of the Income Tax Act and benefits from the same provisions applicable to companies registered in India.
The subsidiary is generally registered as a private limited company and it is necessary to appoint two directors. The procedure on how to form a company in India in this case stipulates that the company’s directors should apply for a Director’s Identification Number. Following specific incorporation steps, such as obtaining the approval for the company’s trading name (issued by the Registrar of Companies), the subsidiary will receive a Certificate of Incorporation. The company’s representatives will need to provide certain documents, which can be detailed by our consultants.
Foreign businessmen are invited to contact our team of consultants for in-depth assistance on the compulsory registration steps applicable to an Indian subsidiary.