Incorporation of Foreign Subsidiary Company in India

If A foreign company planning to set up business in India may incorporate a company under the Companies Act, 2013 as a joint venture or wholly owned subsidiary or set up Liaison Office/ Representative Office or a Project Office or a Branch Office of the foreign company which can be undertake activities permitted under the Foreign Exchange Management (Establishment in India of Branch Office or Other Place of Business) Regulations, 2000.

A Wholly Owned Subsidiary Company can be defined as an entity whose entire share is capital is held by the foreign corporate bodies. A Wholly Owned Subsidiary Company can be formed as a private, limited by share, limited by guarantee or an unlimited liability company.

ATTRIBUTES OF WHOLLY OWNED SUBSIDIARY COMPANY ARE:

There are some of the key features of the wholly owned subsidiary company which are numerated as under:

a) Wholly Owned Subsidiary Company is regulated by the Indian Law i.e. Companies Act 2013.

b) All types of business activities are permitted such as manufacturing, marketing, service industry.

c) Where 100% FDI (Foreign Direct Investment) is permitted no prior approval of RBI (Reserve Bank of India) is required or needed.

d) It is treated as domestic company under Tax Law and is eligible for all exemptions, deduction benefits as applicable to any other Indian Company.

e) Funding can be made in the form of share capital and Loan.

PROCESS OF INCORPORATION

A. STEP – I: APPLY FOR NAME APPROVAL:-

Before application for name approval, foreign Company has to choose the name on basis of followings:-

a) In case of Subsidiary or Wholly Owned Subsidiary Company, Foreign Company can use same prefix as per their Foreign Company for Incorporation of Company in India to take the Benefit of Its goodwill in foreign Country or Any other name as decided by the Foreign Company. For this required board resolution and NOC from that Foreign Company.

b) Foreign Company can apply the same name (name in foreign country) in India by using word “India” in its name.

c) If foreign Company having any registered Trade Mark then it can use such trademark for Incorporation of Company in India.

STEP-2 STEP – PROCESS OF NAME APPROVAL

A. LOGIN ON MCA WEBSITE:

Applicant have to login into their account on MCA Website. After Login use have to click on the icon “RUN” in MCA Service. An online form shall be open. Applicants have to fill the information online. (This form can’t be download)

Note* since 26th January, 2018 e-form INC-1 has been omitted from the Companies Act, 2013.

B. DETAILS REQUIRED TO BE MENTIONED IN ONLINE FORM:-

a) Entity type (i.e. Normal Company, Section 8 Company etc.);

b) Proposed name (Auto Check Facility);

c) Comment (Mention Objects of the proposed Company and any other relevant information Like Trade Mark etc.);

d) Choose File to upload the same in PDF Format only i.e. Apostille copy of Resolution of Foreign Company, NOC of trademark (if required);

e) After that proceed for making payment directly on MCA portal of fixed amount of INR. 1000 as Register Office Fees Rules, Fees.

Note* the same reserved name shall be valid for 20 days from the date of approval of Name.

INFORMATION/DOCUMENTS REQUIRED FROM FOREIGN COMPANY

a) Apostille/Notarized copy of resolution of foreign Company ‘mentioning the name of authorized representative, no. of subscription of shares’;

b) Apostille/Notarized copy of ID Proof of authorized representative, if such person is non-resident of India;

c) Apostille/Notarized copy of Charter of Foreign Company;

d) Name of one Resident Director;

e) Name of Nominee (in case of incorporation of WOS).

PREPARATION   OF   DOCUMENTS   FOR   INCORPORATION OF COMPANY

After approval of name or for Incorporation of Company applicant have to prepare the following below mentioned documents:-

• Memorandum of Association (MoA) of Company (physical copy of MoA shall be prepare; e- MoA (INC-33) can’t be filed);
• Article of Association (AoA) of Company (physical copy of AoA shall be prepare; e- AoA (INC-34) can’t be filed);
• INC-9 declaration by first subscriber(s) and director(s) (duly apostille or notarized in country of origin);
• Declaration from first Directors along with Copy of Proof of Identity and residential address. (Duly apostille or notarized in country of origin);
• Declaration from the foreign subscribers in respect of not having PAN. (Duly apostille or notarized in country of origin);
• NOC from the owner of the property;
• Proof of Office address (Conveyance/ Lease deed/ Rent Agreement etc. along with rent receipts);
• Copy of the utility bills (not older than two months) of registered office address and proposed Directors of the Company;
• Digital Signature with only one Subscriber is enough for Incorporation of Company;

FILL THE INFORMATION IN FORM SPICE-32 AND AGILE ON MCA:

• Maximum THREE (3) directors are allowed for filing application of allotment of DIN while incorporating a Company, if they don’t have DINs; and in case Directors don’t have DINs, then it is mandatory to attach proof of identity and residential address of the subscribers (duly apostille or notarized in country of origin;
• Affix physical apostilled/ notarized copy of MoA in the Form;
• Affix physical apostilled/ notarized copy of AoA in the Form;
• Copy of ID and address Proof directors and the same must be duly apostille/notarised of Foreign National Director;
• Company can apply for an application for Goods and services tax Identification number (GST) registration, Employees State Insurance Corporation registration (ESIC) and Employees provident fund organisation (EPFO) registration in one Form AGILE along with Incorporation by filing on MCA.

CERTIFICATE OF INCORPORATION

The ROC will then scrutinize the above mentioned documents and after being satisfied that all the documents are complete issues the certificate of the incorporation of the company, which is the conclusive proof of registration of the company in India.

At this stage a Permanent Account Number (PAN) and Tax Account Number (TAN) is also issued to the Company by the Income Tax Department.

POST INCORPORATION COMPLIANCES:

Step-I: Open Bank Account to receive Subscription Money;

Step-II: Receipt of Subscription Money from Foreign Subscriber;

Step-III: Filing of e-form 20A – Declaration of Commencement of Business;

Step-IV: Collect FIRC Certificate from the Bank as per FDI Guidelines;

Step-V: Issue Share Certificate to the subscribers;

Step-VI: File FCGPR with RBI as per FDI Guidelines.