Subsidiary or WOS – In India (Foreign Company)

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What are the forms in which business can be conducted by a foreign company in India?

A foreign company planning to set up business operations in India may:

1. Incorporate a company under the Companies Act, 2013, as a Joint Venture or a Wholly Owned Subsidiary.

A company can be registered as private limited or public limited. A private limited company is a closely held company and enjoys the privileges given by the Companies Act, 2013. Generally foreign Companies incorporate Private limited Company in India.

a. 100 % FDI (Foreign Direct Investment) – Sector specific- RBI (Reserve Bank of India) prior approval is not required.

b. Minimum 2 Share Holders ( Individual, Firm, Corporate) and 2 Directors ( Individual only)- Private Limited

c. Funding in the form of Capital or Loan

d. Minimum Share Capital –INR 1,00,000/- only

e. Registered office – India

A public limited company is a company where public is interested and it is required to comply with set of rules and regulations framed by the Companies Act, 2013.

2. Set up a Liaison Office / Representative Office or a Project Office or a Branch Office of the foreign company which can undertake activities permitted under the Foreign Exchange Management (Establishment in India of Branch Office or Other Place of Business) Regulations, 2000.

“Subsidiary or Wholly Owned Subsidiary (WOS) of a Company incorporated outside India.

Incorporation of Company- India

Incorporate a Company in India as ‘Subsidiary” or “Wholly owned Subsidiary (WOS)” of a Company incorporated outside India.

(i) Whether presence of authorized representative of foreign Company mandatory in India at the time of signing of documents.

a) Not necessary subject to the documents got legalized from the home country, Indian Consulate of Foreign Country and Professional.

b) One Resident Director: The Companies Act, 2013 permits NRIs, PIOs, Foreign Nationals and Foreign Residents to act as a Director of an Indian Company. To become a Director of an Indian Company, the person must first obtain a Director Identification Number (DIN) after obtaining Digital Signature Certificate. A private limited company must have a minimum of two Directors and can have a maximum of fifteen Directors. It is recommended that at least one Director be an Indian Citizen and Indian Resident, while the other Board members can be of any nationality or residency.

(ii) List of Documents (ID Proofs) required to be legalized.

a. KYC Documents including photographs of Individual or representatives

1. Passport (Mandatory)

2. Address Proof (Indian Consulate must certify electricity Bill, Telephone Bill, Bank statement or passbook or rent agreement and latest electricity bill in case of rented accommodation. Document)

3. Photo ID Proof (Any government license or document containing name in full, photo and date of birth. Document must be certified by Indian Consulate)

b. MOA & AOA of Parent Company ( Company is Subscriber/shareholder)

c. Declaration- Specific Form

d. Affidavit- Specific Form

e. MOA & AOA of Indian proposed Company

PROCESS OF INCORPORATION

STEP – I: Apply for Name Approval:

Before application for name approval, Foreign Company have to choose the name on basis of followings:

a) In case of Subsidiary or WOS, Foreign Company can use coin word of its name as coin word for Incorporation of Company in India to take the Benefit of Its goodwill in foreign County or may apply with word “India” in its name. The foreign company will have to produce the documents particularly Charter of the Company duly legalized from the home country.

b) If foreign Company having any registered Trade Mark – It can use that mark for name approval subject to the registration certificate got legalized from home country.

c) Any other name as decided by the foreign company subject to the provisions of the Act.

Process of name approval:

1. Post log in fill the prescribed form with details like entity, proposed name (One name), Comment- main Object Clause

2. Attach Documents – legalized from the home country, if any

3. Submit form and make payment of prescribed fees.

Once the name is approved it is important to get registered the company using the name reserved since it shall be valid for 20 days only.

STEP – II: Filing of Incorporation Documents with E Form – SPICE e – INC 32

√ Memorandum of Association of Company – Hard Copy

√ Article of Association of Company – Hard Copy

√ INC-9 Affidavit / declaration by first subscriber(s) and director(s) (Duly legalized or notarized in country of origin).

√ DIR-2 declaration from first Directors along with Copy of Proof of Identity and residential address. (Duly legalized or notarized in country of origin).

√ Declaration from the foreign subscribers in respect of not having PAN. (Duly legalized or notarized in country of origin)

√ NOC from the owner of the property.

√ Proofs of Office address (Conveyance! Lease deed! Rent Agreement etc. along with rent receipts);

√ Copy of the utility bills (not older than two months)

√ In case of subscribers/ Director does not have a DIN, it is mandatory to attach: Proof of identity and residential address of the subscribers (Duly legalized or notarized in country of origin)

√ Digital Signature with only one Subscriber is fine for Incorporation of Company.

√ DIR-2 from the Resident Director along with self-attested copy of PAN and resident.

STEP – III: Process to be followed post getting Incorporation Certificate with PAN  & TAN

√ Open Bank Account to receive Subscription Money.

√ Receipt of Subscription Money from Foreign Subscriber.

√ Issue Share Certificate to the subscribers.

Foreign Subsidiaries – In India
Source Country	Active	NAEF
UNITED STATES OF AMERICA	454	135
SINGAPORE	287	138
UNITED KINGDOM	258	63
JAPAN	209	88
GERMANY	158	53
KOREA, REPUBLIC OF	109	33
HONG KONG	101	47

Source: MCA – data 2014

DISCLAIMER: This information is an opinion on the subject and users of this information are expected to refer to the relevant existing provisions of applicable laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I would not be held responsible for the act based on the information provided as above.