- SWAPNIL L. SHINDE
- | Company Law - Articles
- 25 May 2020
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A Indian Subsidiary Company is also known as a subsidiary or a sister company of parent company; andthe company which practices control over it, is called as the parent company of subsidiary company, or holding company. A subsidiary company always controlled by the parent company (holding company)partially or fully.A Indian subsidiary company is termed as subsidiary or sister company of holding or parent company.bellow given content, we will understand detailed information of Indian Subsidiary company registration procedure, documentation, types, and procedure required for it.
Page Contents
Meaning of subsidiary company
An Indian subsidiary, the parent company must own at least 50% or more of the subsidiary. When the parent company owns 100% of the subsidiary of parent company is known as a wholly-owned or fully owned subsidiary. But main thing is that the subsidiary company of a foreign parent company is a separate legal entity from parent company, and the subsidiary company is obligated to function under the rules and compliances of the country where it is situated or registered.
Advantages of Opening Indian subsidiary
For forming an Indian subsidiary company there was various advantages in the business compliances in the case of the Indian subsidiary the following advantages will apply.
1. Independent legal structure—The Indian subsidiary is an independent or separate legal structure from its parent company and it is regulated under the Indian commercial legislation.
2. Transfer of shares: – The shares purchased by a shareholder can be simply transferred or exchanged to another party or person, after signing a share transfer form and a share certificate.
3. Acquire property in India: – As the subsidiary is an independent structure, it is allowed to acquire properties in India.
4. Incorporation with foreign direct investment: – as mentioned above, Foreign Direct Investment is widely allowed to Indian subsidiary companies and this applies to most of the economic activities that are available in those country.
Types of subsidiaries in India
As per detailed defined under the revised Companies Act 2013, a Indian subsidiary is defined as a company in which a foreign legal entity owns at least 50% of the total share capital. The definition will explain that foreign company having legal rights and authorities on the structure of the board of directors of the subsidiary company.
Documents Required For Incorporation
1. For Office Address: Office Address proof (Electricity bill or rent agreement) and latest self- attested electricity bill in case of rented accommodation
2. Indian national: Pan card compulsory, Address proof (latest Electricity bill or rent agreement) and latest self-attested electricity bill in case of rented firm, photo Id proof (passport or driving license)
3. Foreign Nationals: Passport (mandatory), Address proof (electricity bill, telephone bill, latest bank statement or passbook or rent agreement in case of rented accommodation and latest electricity bill. Document must be attested by the Indian Consulate Photo Id Proof- Government license any types or document which clearly shows full name of applicant, photo with clear resolution and date of birth
Minimum Requirement To Incorporate Indian Subsidiary Company;
1. At list Two Directors
2. Two Shareholders
Procedure to incorporation
- After minimum requirements (which was described as above) are clearly fulfilled then the owners have right to begin the procedure of incorporation.
- First steps to go incorporation process with subsidiary company, minimum two directors apply for DSC (Digital Signature Certificate), with all the director’s mandatory to apply for DIN
(Director’s Identification No). - After the above steps the applicant is required to apply for the name of the company in Form INC-1 as per the name application procedure. But note that name you applied it must be unique from other company names
- After successfully approval of name from ROC (Registrar of Companies) of Ministry Of Corporate Affairs, an applicant is required to file: Form INC-7 which means application for incorporation of company other than one-person company.
Form DIR-12 Which Means particulars of appointment of directors and key managerial personal.
Form INC-22 Which means MOA of the company along with notice of situation clause.
- Then the filing of the company’s incorporation documents, fees of Registrar of companies have to pay online to ROC and also related Stamp duty is paid by the applicant. (Stamp duty is based on the authorized capital of the subsidiary company).
- After the related determined fees paid to ROC verifies all filed documents which was upload in application. Form all which given above INC-22 and DIR-12 are approved via the Straight-
Through-Process (STP) and then the ROC verifies Form INC-7 Means application of incorporation of companies in detail manner. The ROC may be suggest some changes in the form or attachment wherever its required. - Finally, the changes have been affected and the ROC is satisfied on the full application and documents requirement, then the Certificate of Incorporation is sent to the applicant via email in detailed manner.
- If the above mentioned procedure of documents are available and the proper procedure is followed by the applicant, then there will not be any unnecessary delays from ROC and then
company can be incorporated succefully
Takeaway:
THE Indian Subsidiary Company is determined the same as the other type of Indian Company, and the rules determined the Indian Company are the same for the Indian Subsidiary company. If the applicant company complies with the above-mentioned incorporation procedure along with the proper documentation, it will get the Certificate of Incorporation at earliest.
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If government Company makes a subsidiary company and not registered in
Office of Company Registerar. what this is allowed by Indian Company Act. 1956.
Please update the procedure of incorporation in the article with SPICe+ effective 23 February 2020. The information provided will misguide the readers as it contains the outdated information.