Subsidiary Of Foreign Company in Kolkata

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Frequently Asked Qustion

Is foreign National is required to visit India for registration of Company?
Is the Company required to hold Compulsory Board Meeting and if so does foreign national is required to come India for such meetings?
Can registered office may be situated outside India?
Can a foreign Company register a Wholly Owned Subsidiary Company in India?
Is there is any RBI Compliance required to be done when there is Foreign Capital Inflow in Company?

Subsidiary Of Foreign Company

Foreign company registration in India is regulated by the Companies Act, 2013 along with Companies (Registration of Foreign Companies) Rules, 2014. Sec 2 (42) of the Companies Act 2013The market of India serves the following classification of ways a foreign company registration can be initiated in India and set up business operations in India by following:

  • As an Indian Company: 
    • Wholly Owned Subsidiary
    • Joint Venture
  •  As a Foreign Company:
    • Setting up a Liaison Office
    • Representative Office or a Project Office or
    • Branch Office of the foreign company

Ways to Foreign Company Registration in India

1. As an Indian Company-

Wholly owned subsidiary Company

For an Indian company to Become Wholly Owned Subsidiary Company of a Foreign Company, a foreign company needs to invest 100% FDI in that Indian company through automatic route, for the purpose of foreign company registration in India.
Example if  ABC of US owns 100% shares in XY Ltd of India then XY Ltd becomes the subsidiary company of ABC. It is important to note that in such circumstances, the Indian company is an entity whose whole share capital is in the hand of a foreign corporate body, which can be a private limited company by guarantee or shares or an unlimited liability company.

Following documents are required for such foreign company registration in India:

Address proof of the office (In case of a rented property, the latest electricity bill)

For Indian citizen

  • PAN card mandatory
  • Address proof
  • Photograph ID proof like Aadhar card.

For foreign national

  • Passport mandatory
  • Address Proof
  • Photograph ID Proof like any government license
  • Documents submitted must be certified by the Indian Consular or consulate.

Joint Venture

It is important for the foreign company to elect a local partner with whom it wants to enter into a joint venture. A Memorandum of Understanding or a Letter of Intent is to be signed which will state the basis for the joint venture agreement. A thorough discussion of all the terms should be done and they must be consistent with regional as well as international law. Important matters to be addressed are as follows:

  • Dispute resolution agreements
  • Law Applicable
  • Holding shares
  • Transfer of shares
  • Board of Directors Non-Compete
  • Confidentiality etc

2. As a Foreign Company

Setting up a Liaison Office or Representative Office

RBI prescribes the criteria for setting up a Liaison office or Representative Office in India, which are as follows:

  • It is essential to have a profit making record in the immediately preceding 3 financial years in the home country, and the net value should be more than USD 50,000.
  •  In case, the above condition is not satisfied by the subsidiary company, a letter of comfort is to be submitted by the parent company which satisfies the above condition.
  • Specific approval of RBI under FEMA 1999 and Insurance Regulatory and Development Authority (IRDA) is required.
  • A designated Authorised Dealer Category–I Bank needs to forward an application for establishing an office to the RBI.
  • The office will be given a Unique Identification Number by RBI.
  • Along with the Application, English version of the Certificate of Incorporation/Registration or MOA & AOA (attested by the Indian Embassy/Notary Public), required documents should also be filed. Latest Audited Balance Sheet of the applicant entity should also be filed in the Country of Registration.

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Important Conditions for FDI in a Company

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Check FDI Limit

Most of the sectors are open for foreign direct investment in India under automatic route, without any prior approval for incorporation of the company.

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One Resident Director

One director of the company must be resident in India. A person is said to be a resident when he/she stays in India for at least 182 days in during the FY.

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Business Visa

The directors/shareholders visiting India for signing documents must be on a Business Visa; otherwise, documents must be legalised/ attested.

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Attestation / Apostille

All documents of foreign origin and those executed in a foreign territory need to be legalised by way of attestation by Indian high commission or Apostille.

 

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