Establishing a subsidiary in India is a key step for expanding into one of the world's largest and most dynamic markets. Seion Strategies offers expert guidance to simplify the foreign subsidiary registration process, ensuring compliance with the Companies Act 2013 and smooth navigation of legal and regulatory requirements.
What is a Subsidiary Company?
A subsidiary company is controlled by a parent company, which holds at least 50% of the subsidiary's shares. In India, the registration of a foreign subsidiary is governed by the Companies Act of 2013.
Key Advantages of Registering a Subsidiary in India
- Access to the Indian Market: Enter one of the world's fastest-growing economies, attracting investment opportunities for global businesses.
- Foreign Direct Investment (FDI): FDI provisions allow foreign companies to invest in Indian businesses, with special approval for investments from neighboring countries.
- Perpetual Succession: The company exists independently of changes in management or ownership, ensuring continuity.
- Limited Liability: Shareholders’ liability is limited to their share investment, protecting personal assets.
- Expansion Opportunities: Establishing a subsidiary allows for greater market reach and introduces diverse products and services.
- Separate Legal Identity: A subsidiary is a distinct legal entity, able to sign contracts, own property, and engage in legal actions in its own name.
- Property Ownership: Subsidiaries can own or rent property in India, providing stability for operations.
Regulatory Authorities for Subsidiary Registration
- Ministry of Corporate Affairs (MCA): Oversees company registration and compliance.
- Registrar of Companies (ROC): Handles company incorporation.
- Reserve Bank of India (RBI): Regulates foreign currency exchange and foreign investments.
Key Requirements for Foreign Subsidiary Registration
- Company Name: A unique name distinct from other businesses.
- Shareholders: The parent company can hold 100% of shares or share ownership with foreign nationals.
- Share Capital: No minimum capital requirement for registration.
- Directors: At least two directors, with one being an Indian resident.
- Registered Address: Must have a valid Indian address for official records.
- AGM: At least one annual general meeting (AGM) and two board meetings per year.
- Company Secretary: A statutory auditor and a company secretary are required for compliance.
Taxation and Compliance
- Corporate Tax: The profit tax rate is around 25.36%.
- GST: Applicable on domestic sales, with monthly returns and one annual filing.
- Annual Filings: Companies must comply with statutory audits and annual filings.