Practical Aspects on Incorporation of Foreign Subsidiary Company In India & Indian Company Law on Names, Notary, Apostillation & Consularisation

Practical Aspects On Incorporation of Foreign Subsidiary Company In India and The Indian Company Law on Names, Notary, Apostillation and Consularisation

The Indian Companies Act, 2013 (Act) allows the incorporation of Subsidiary Company of Foreign Company in India. The Subsidiary Company of Foreign Company means either controls the composition of the Board of directors or exercises or controls more than half of the total share capital.

INDIAN LAW ON APPLICATION OF NAME OF FOREIGN COMPANY:

• As per Rule 8 of the Companies(Incorporation) Rules, 2014 (“hereinafter referred to as the Rules”) states that if a foreign company is incorporating its subsidiary company in India, then the original name of the holding company as it is may be allowed with the addition of word India or name of any Indian State or city, if otherwise available:

Provided further that provisions of rule 8 shall apply mutatis mutandis while determining whether a proposed name is too nearly resembling the name of a company or limited liability partnership incorporated outside India.

• The name shall be considered undesirable, if the proposed name implies association or connection with an embassy or consulate of a foreign government;
• The proposed name includes name of any foreign country or any city in a foreign country, the same shall be allowed if the applicant produces any proof of significance of business relations with such foreign country like memorandum of understanding with a company of such country:

Provided that the name combining the name of a foreign country with the use of India like India Japan or Japan India shall be allowed if, there is a government to government participation or patronage and no company shall be incorporated using the name of an enemy country.

INFORMATION AND DOCUMENTS REQUIRED FOR INCORPORATION OF FOREIGN SUBSIDIARY COMPANY IN INDIA

FIRST OF ALL, ALL THE DOCUMENTS SIGNED OUTSIDE INDIA WHETHER FOR APPLICATION OF NAME OR FOR INCORPORATION SHALL BE NOTARIZED/APOSTILLED/ CONSULARISED DEPENDING ON THE COUNTRY.

> At the time of application of name:

• • INCORPORATION/REGISTRATION CERTIFICATE:

The copy of incorporation or registration certificate is also required which should be in English language or should be translated in English language.

• • TRADEMARK CERTIFICATE:

The copy of Certificate of registered Trademark, if any,

• • NOC:

NOC from the Foreign Company to use a “particular” word or ‘Trademark” in the form of Resolution.

> After the approval of name, the following information will be required:

• •  RESOLUTION:

The copy of resolution passed by Foreign Company.

Please note that the name of authorized representative and no. of shares subscribed should be mentioned in such resolution.

• •  ID PROOF:

The copy of ID Proof of authorized representative.

Please note that such ID proof should be duly notarized/apostilled/ consularised in case such representative is non-resident.

Who can become Authorised Representative?

Any person be it Non-resident or Resident Indian can become Authorised Representative.

• •  MOA:

Copy of Charter (MOA) of Foreign Company

• • RESIDENT DIRECTOR:

Details of atleast one Resident Indian Director should be provided.

• • NOMINEE:

Name of Nominee of the share.

Please note that the name and signature of Nominee will be required in case the Company is going to be incorporated as the WHOLLY-OWNED Subsidiary (100% shareholding by Foreign Company) because as per Indian Companies Act, minimum two shareholders are required.

Practically speaking, the MCA(CRC) raises objection if the Authorised Representative and Subscriber are same person.

> After the above information, the following documents need to be drafted:

• • MAOA:

The MOA and AOA of the company

Please note that in case of Foreign Subsidiary, eMOA and eAOA are not accepted by MCA(CRC) due to their attestation and signing outside India.

• • PAN DECLARATION:

Declaration from the foreign subscribers in respect of not having Indian PAN

• • FORM DIR-2

Form DIR-2 for consent to act as director, to be signed by each director

Note that the DIR-2 signed by the Indian Director need not to be notarized/apostilled/ consularised if it is signing in India.

• •  KYC:

ID and Address proof of the directors who doesn’t posses DIN

Please note that the DIN holders doesn’t need to attach their KYC. The MCA(CRC) accepts Passport/ Voter ID/ Driving License as ID proof and they accept Bank Statement/ Utility bill address proof for individuals who doesn’t possess DIN.

• •  FORM INC-9:

Form INC-9 for declaration by the first subscriber and directors

• • DIGITAL SIGNATURE:

Digital Signature of only one Subscriber is enough for Incorporation of such Company

• • NOC:

NOC from the owner of the property in case if the property is taken on lease for use of registered office of the company;

• • ADDRESS PROOF:

Proof of office address like rent agreement/lease deed along with copy of utility bill like water bill, electricity bill, telephone bill which should not not older than 2 months

INDIAN LAW ON NOTARY, APOSTILLATION AND CONSULARISATION:  

As we have studied above, all the documents signed outside India whether for application of name or for incorporation shall be notarized/apostilled/ consularised depending on the country, the Companies (Incorporation) Rules, 2014 provides the following:

Rule 13(5) classified the Foreign Countries into three categories as enumerated in the table for which attestation of documents is required to be done as per the country of origin.

As per rule 13(5)(a), where subscriber to the memorandum is a foreign national residing outside India, there is a need to attest the documents of proposed subscribers as per the manner indicated below:

Rule	Type of Country	Text of Rule	Type of Attestation
13(5)(a)	Applies to Commonwealth Countries	In a country in any part of the Commonwealth, his signatures and address on the memorandum and articles of association and proof of identity shall be notarized by a Notary (Public) in that part of the Commonwealth.	Notary (Public)
13(5)(b)	Applies to Hague Apostille Convention Countries	in a country which is a party to the Hague Apostille Convention, 1961, his signatures and address on the memorandum and articles of association and proof of identity shall be notarized before the Notary (Public) of the country of his origin and be duly apostillised in accordance with the said Hague Convention.	Notary (Public) + Apostillation
13(5)(c)	Applies to a Country outside the Commonwealth and Hague Apostille Convention	his signatures and address on the memorandum and articles of association and proof of identity, shall be notarized before the Notary (Public) of such country and the certificate of the Notary (Public) shall be authenticated by a Diplomatic or Consular Officer empowered in this behalf under section 3 of the Diplomatic and Consular Officers (Oaths and Fees) Act, 1948 (40 of 1948) or, where there is no such officer by any of the officials mentioned in section 6 of the Commissioners of Oaths Act, 1889 (52 and 53 Vic.C.10), or in any Act amending the same;	Notary (Public) + Consularisation   (Authentication of such Notary(Public) by Diplomatic or Consular Officer )

INDIAN LAW ON VISA:

The rule 13(5)(c) states that where subscriber to the memorandum is a foreign national residing outside India and visited in India and intended to incorporate a company, in such case, the incorporation shall be allowed if, he/she is having a valid Business Visa.

The proof of such visa along with the arrival stamps shall be required and the same shall be annexed in SPICe form at the time of incorporation.

Explanation- For the purposes of this clause, it is hereby clarified that, in case of Person is of Indian Origin or Overseas Citizen of India, requirement of business Visa shall not be applicable.

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 Disclaimer:  This article contains interpretation of the Act, Rules, Regulations, Notifications issued and personal views of the author are based on such interpretation. Readers are advised either to cross check the views of the author with the Act or seek the expert’s views if they want to rely on contents of this article. I assume no responsibility therefore. This is only a knowledge sharing initiative and author has no intention to solicit any business or profession.

About Author: The above has been compiled by CS. Varun Kapoor, proprietor of V Kapoor & Associates, Practicing Company Secretary from Rohini, New Delhi and Faridabad. For any queries or suggestions, he can be approached at pcsvarunkapoor@gmail.com or 9899110705.