Process Incorporation of Foreign Subsidiary / WOS

Whenever anyone incorporate a Company in India as ‘Subsidiary” or “Wholly owned Subsidiary (WOS)” of a Company incorporated outside India. Many questions came into notice like:

(i) What are the information/ Documents required from foreign Company?

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

(iii) What are the provisions in respect of Notary / Apostil etc.

(iv) Which ID Proofs / Identity proof of foreign subscribers required by the Company etc. etc.

Many more questions came into thoughts while incorporation of subsidiary of foreign subsidiary. In this editorial author shall try to clarify all such doubts / queries in practical approach.

PROCESS OF INCORPORATION

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 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.

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.

d) Any other name as decided by the Foreign Company.

i. While selecting the name thought came into mind what are the documents/ information required for application of Name by foreign Company?

In case of Foreign Company using Its “Coin” word or “Trademark” following Documents / information required:

  • NOC from the Foreign Company to use the ‘Coin’ word or ‘Trademark” in the form of Resolution.
  • Apostilled copy of Charter of Foreign Company (translated in English language).
  • Such resolution shall be apostille in foreign Country.
  • In case of use of Trademark – copy of trade mark registration documents.

♦ Process of Name Approval

SPICe+ would have two parts viz.:

A. Part A – Name Approval

B. Part-B- Incorporation of Company

STEP – I:

PART A-for Name reservation for new companies

MCA Service

A. Login on MCA Website

Applicant have to login into their account on MCA Website. (Pre-existing users can use earlier account or new users have to create a new account.)

After Login the following screen will appear:

Spice

B. Steps: II Click on New Application and following window will open:

(This form can’t be downloaded; it has to be filled on real time basis)

Details required to be mentioned in online form:

Spice + part A

(i) Type of Company (i.e. Producer, Part I, OPC, Section 8 etc.)

(ii) Class of Company (whether Private, Public)

(iii) Category of Company (whether Company limited by shares, limited by Guarantee or unlimited)

(iv) Sub-category Union Government, State Government, Non-Government Company, Subsidiary of Company incorporated outside India)

(v) Main Division of Industrial Activity (enter number belonging to Industrial Activity)

(vi) Description of main division

(vii) Particulars of Proposed or Approved Name. (User has to enter the name he wants to reserve, for incorporation of a new company. Users are requested to ensure that the proposed name selected does not contain any word which is prohibited under Section 4(2) & (3) of the Companies Act, 2013 read with Rule 8 of the Companies (Incorporation) Rules, 2014. Users are also requested to read and understand Rule 8 of the Companies (Incorporation) Rules, 2014 in respect of any proposed name before applying for the same. For Name Search: http://www.mca.gov.in/mcafoportal/showCheckCompanyName.do)

Stakeholders are requested to also check the Trademark search to ensure that the proposed name is not in violation of provisions of Section 4(2) of the Companies Act, 2013, failing which it is liable to be rejected. For Trade Mark Search: http://www.ipindia.nic.in/index.htm

Note: Two fields are available ie the two proposed names can be entered

(i) Choose File (Any attachment)

This option is available to upload the PDF documents. It is not mandatory to attach any document except in case where a name which requires the approval of a Sectoral Regulator or NOC etc, if applicable, as per Companies (Incorporation) Rules, 2014. Only one file is allowed, if have multiple then scan into one document. The attachment size cannot exceed 6 MB for both Part A and Part B taken together.

Steps: III Fill the given Information and save the application as follows:

  • Fill the Information
  • Save the Application
  • Submit the Application

After Submit below given window will open:

confirmation Alert

C. Here stake holder having two options:

Option 1: Submit Name application and make payment of the same for name approval. Payment of Rs. 1,000/-

Option 2: Click on “Proceed for Incorporation”

After click on “Proceed for Incorporation” below given window will open:

NOTE: * Approval of Name through “PART-A” is an optional way. Companies can also directly apply for the Information after continuation with PART B form.

It is advisable to go through PART-A route

Part B- Incorporation of Company

STEP – II: 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)

STEP – III: 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 of Company (Physical copy of MOA shall be prepare; e-MOA (INC-33) can’t be prepared). (Duly apostille or notarized in country of origin).

♦ Article of Association of Company (Physical copy of AOA shall be prepare; e-AOA (INC-34) can’t be prepared). (Duly apostille or notarized in country of origin).

♦ INC-9 declaration by first subscriber(s) and director(s) (Duly apostille or notarized in country of origin). If all the subscribers having PAN/DIN then INC-9 shall be e-INC-9 download from dashboard.

♦ DIR-2 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)

♦ 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 apostille or notarized in country of origin)

♦ Digital Signature with only one Subscriber is enough for Incorporation of Company.

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

STEP – IV: Fill the Information in Form:

Once all the above mentioned documents/ information are available. Applicant has to fill the information in the e-form “Spice+”.

Features of SPICe+ form:

Web based: This is web-based form, that means this form can’t be download. It will be filled on MCA website online only.

Online Information:This form once online information filed will be save there only and can be access in dash board of the Log in ID.

Fill details of PAN & TAN:

It is mandatory to mention the details of PAN & TAN in the Incorporation Form Spice+. Link to find out of Area Code to file PAN & TAN are given in Help Kit of SPICE+.

√ Attachment of Documents:In web-based form only promoters have to attach documents pdf files.

√ Download PDF form:After complete filing of information in web-based form. Download PDF file of the form from dashboard.

√ Process after Downloading of PDF:Below given steps have to use for incorporation of company.

STEP – V: Fill details of GST, EPFO, ESIC, BANK Account in AGILE PRO:

After proper filing of SPICE+ form applicant has to move on filling of information in the AGILE PRO form Dashboard Link. All the information which are common in PART-B and AGILE PRO shall be auto fill in AGILE Pro. It is also web based form.

  • GST:If Company wants to apply for GST it has to select YES in the form and fill the information in the form.
  • EPFO/ ESIC:It is mandatory to apply for ESIC and EPFO.
  • However, as per their concerned department company not required to file return till the date applicability of provisions of same on such company.
  • Bank Account:It is mandatory to open bank account through this form. Bank account branch shall be assigned according to nearest branch to the Registered office of the Company.

STEP – VI: Fill details of INC-9:

INC-9 shall also be generated web-based and need affixation of Directors/ subscribers on the same. It shall not be generated web-based in one situation when atleast one directors/ subscriber not having DIN and PAN both.

STEP – VII: Download PDF of all the web-based forms-:

After filing of all web-based form i.e.

  • Spice+
  • Agile Pro
  • INC-9

Download PDF of such forms from dash board given link. After downloading of PDF affix DSC on all the forms accordingly.

STEP – VIII: Filing of forms with MCA-:

Once all forms ready with the applicant, upload all four document as Linked form on MCA website and make the payment of the same.

STEP – IX: Certificate of Incorporation-:

Incorporation certificate shall be generated with CIN, PAN & TAN details over it.

Features of SPICe+ form:

  • Maximum details of directors are TWENTY (20).
  • Maximum THREE (3) directors are allowed for filing application of allotment of DIN while incorporating a Company.
  • Affix physical apostilled/ notarized copy of MOA in the Form.
  • Affix physical apostilled/ notarized copy of AOA in the Form.
  • Applying for PAN / TAN will be compulsory for all fresh incorporation applications filed in the new version of the SPICe form.
  • Applying for ESIC/EPFO/ Bank Account will be compulsory for all fresh incorporation applications filed in the new version of the SPICe form.
  • Company can apply for GST, IEC also through AGILE form.
  • In case of companies incorporated, with effect from the 26th day of January, 2018, with a nominal capital of less than or equal to rupees ten lakhs or in respect of companies not having a share capital whose number of members as stated in the articles of association does not exceed twenty, fee on INC-32 (SPICe) shall not be applicable
  • Registration for EPFO and ESIC shall be mandatory for all new companies incorporated w.e.f 15 February 2020 and no EPFO & ESIC registration nos. shall be separately issued by the respective agencies
  • Registration for Profession Tax shall also be mandatory for all new companies incorporated in the State of Maharashtra w.e.f 15th February 2020
  • All new companies incorporated through SPICe+ (w.e.f 15th February 2020) would also be mandatorily required to apply for opening the company’s Bank account through the AGILE-PRO linked web form.

POST INCORPORATION

Step –I: Receipt of Subscription Money from Foreign Subscriber.

Step –II: Filing of e-form 20A – Declaration of Commencement of Business.

Step – III: Collect FIRC Certificate from the Bank as per FDI Guidelines.

Step IV: Issue Share Certificate to the subscribers.

Step V: File FCGPR with RBI as per FDI Guidelines.

Notes:

1. 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.

Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore.

Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com).

(Republished with Amendments)

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10 Comments

  1. Cyrus says:

    Can you kindly educate me on the regulations that need to be followed for an Indian listed company for a WOS overseas subsidiary on :
    a) Appointment & Remuneration of Manager / Managing Director of an overseas WOS – does it require Board Approval
    b) What can be the term of such Manager / Managing Director
    c) Can the same person hold office as a Managing Director in Indian Holding Company while also being a Manager in Overseas WOS
    c) What sections of Companies Act govern these provisions

  2. Harish says:

    Dear Sir,
    I have a query that, Can the authorised person in foreign company be the director of its subsidary while incorporating in India.
    Please help me in solving this.

    1. Goddillusion says:

      Yes Harish,

      A authorized representative of foreign company can be director in subsidiary company incorporated in India

      Mithlesh Sharma
      SetyourBiz.com

  3. Megha says:

    Dear Sir,

    Thank You for this wonderful article.

    However, i have a question, that if the Foreign Body Corporate Subscriber authorizes an Indian Resident to do all the signing and executions. Do we still need to get the documents apostilied and notarised?

    1. Goddillusion says:

      Megha,

      If subscriber of Memorandum of memorandum is non resident it you have to do apostilied or notarized as required

      Mithlesh Sharma

  4. Abishek Giya says:

    Hi Pankaj Kumar,

    I would like to answer the above Question.

    As per Rule 8 and 8A of chapter II of Companies Incorporation Rules, 2014, the Names shall not be disregarded if it is nearly same to other existing Company or LLP if a NOC in the form of Board Resolution has been provided by an existing Company or LLP.

    It applies similarly to the situation of a Registered Trademark. If Board Resolution / NOC as applicable is taken from the concerned person the Name will not be disregarded.

    Abishek Giya
    Trainee – Startupwala

    1. Goddillusion says:

      Abishek Giya

      Allow me make some correction over this

      You have to file NOC/ Resolution for use of Trademark already registered or it is in process of registration. Hence if a trademark status is Objected, Accepted, Accepted and advertised or opposed you have to provide NOC/Resolution.
      Further, you have to attach with NOC/Resolution PAN and ID proof of the person who is giving NOC or the person who is signing the resolution as NOC.
      Furthermore, if NOC/Resolution is given by non resident person or Body incorporate you have attach International Passport copy as ID proof.

      Mithlesh Sharma

  5. Siddesh Bhaktha says:

    how to prepare valuation report ? Also what is the certificate require from Statutory Auditor? Also what option do we chose in form FC-GPR as there is no option for subscrioption to Memorandum but only for rights issue/merger and amalgantions/ ESOP

  6. Siddhesh Warhadi says:

    Hello..I need a clarification on one Query..The MCA required “Please attach Docs of foreign country duly appostile/notarized/consularize as the case may be according to relevent conventions of Co Act,2013”. What does this mean. We attached the NOC of trade mark holder who is foreign citizen and trade mark holder. Soo, do we need to get the NOC to be appostile in India or In the country in which it is been signed.

  7. Pankaj Kumar says:

    Hi Divesh,

    Can you provide your suggestion on following for RUN.

    Applied a Name which is nearly with existing name of LLP, with NOC from that LLP, In which one partner will be promtor to New company.

    Name approval was rejected by ROC by saying name is resambled near to existing LLP.

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