At present most of the Companies or foreign nationals are very much interested to expand their business in India for exploring Indian market and to promote parent company’s business activities. India would be the right platform for carrying business and explore trade opportunities as Indian Market provides a very sustainable environment for any type of business.

Foreign Direct Investment (FDI) has been given way at its peak due to the liberal and global policies framed by the Indian Government.

Incorporate foreign subsidiary company or wholly owned subsidiary company under Ease of Doing Business initiatives set up by Ministry of Corporate Affairs (MCA), Government of India. Chhota CFO assists in starting business in India.

The following procedure to be complied to obtain Certificate of Incorporation.

SL.NO PARTICULARS INFORMATION
1. Foreign subsidiary Company or Wholly owned subsidiary Company 1. Foreign Subsidiary Company – Minimum 51% of the shares to be held by parent Company or Holding Company.

2. Wholly Owned Subsidiary Company – 100% of shares could be held by Parent company or Holding Company

2. Nature of business Based on the objects and the industry of sector of the company, we need to analyse FDI CAP and if falls under Automatic route or Approval route from Government Sector wise FDI Cap

https://dipp.gov.in/foreign-direct-investment/foreign-direct-investment-policy

3. Situation of the parent company and Beneficial Shareholding of the Parent Company Chhota CFO shall scrutinize the shareholding structure of the parent company to ascertain the requirement of approval from Government of India.
4. Digital Signature Certificate (DSC)-Class 3 DSC For Foreign Directors – Apostilled and notarized copy of Identity Proof (Passport) and Address Proof (Utility Bill/ Driving License), Passport size photo, Contact number and E-mail Id For Indian Director – Identity Proof (PAN) & Address Proof – Aadhaar/ Utility Bill/ Driving License, Passport size photo, Contact number and E-mail Id.

The applicants must complete a Video/SMS verification for obtaining of DSC.

5. Board Resolution in Parent company or Holding Company Board resolution from holding company outside India and objects of the company incorporating in India required for applying name of the Indian Company.

The Board resolution is to be notarised or apostilled or consularized at the country of holding company based on the provisions of the Country.

6. Company Name Maximum 2 Proposed Names can be given at the time of Reserving Unique Name (RUN) and Name Approval is subject to the discretion of the MCA Authority.

Parent Name can be used by adding the words “India”.

Suffix or prefix could be used for Parent company Name.

New Name can also be suggested.

7. Proposed Shareholders Minimum 2 shareholders are required.

OPTION I-

1.100% could be held by Holding or parent company and

2. Nominee shareholder to meet the Compliance.

OPTION II-

1. Minimum 51% shareholding to be held by Parent Company and

2. Remaining shareholding shall be held by any other Body Corporate or Individual.

8. Proposed Directors Minimum 2 Directors – Out of 2, one should be of them is to mandatorily Resident Director.

Foreign Director– The foreign Individual or non-resident Indians residing out of India can be appointed as a Director in the Company.

Resident Director means Director who has stayed in India for a total period of more than 180 days in the previous calendar year.

9. Capital Investment Authorized Capital- It is the ceiling limit against which shares can be issued to the shareholders.

Paid up Capital – It is the amount of money invested by the company and payment remitted to the bank against which shares issued to the shareholders.

Note: Any alterations to the Authorized or Paid up share capital to be made, requisite procedure and forms to be filed with MCA.

10. Form SPICE-32 to be filed with MCA along with Main Objects (Business Activity) and Articles of the Company The various apostilled and notarized documents to be attached along with chartered documents i.e., MOA and AOA, including the proof of business place and KYC documents of Directors.

(shall be prepared from our end)

11. Other Registration under Respective Regulatory Authority 1. Central Government- Allotment of DIN

2. NSDL-Mandatory issue of PAN

3. NSDL-Mandatory issue of TAN

4. Ministry of Labour and Employment-Mandatory issue of EPFO registration

5. Ministry of Labour and Employment-Mandatory issue of ESIC registration

6. Commercial Tax Department-Mandatory issue of Profession Tax registration (Maharashtra and Karnataka)

7. Banking Regulation Act-Mandatory Opening of Bank Account for the Company and

8. Central Board of Indirect Taxes and Customs -Allotment of GSTIN (if so applied for)

The Memorandum and Articles of Association and other requisite documents of the Company shall be signed by each Subscriber.

Subscriber Status Documents
Resident in a country falls under commonwealth https://www.tendringdc.gov.uk/council/elections-voting/list-commonwealth-countries-voting-rights To be notarized by a Notary (Public) in that part of the Commonwealth the following documents-

  • Signature and Address of subscriber on Memorandum and Articles of Association
  • Proof of Identity and Proof of Residence
Resident in a country which is a party to the Hague Apostille Convention,1961 https://www.gsccca.org/notary-and-apostilles/apostilles/hague-apostille-country-list To be notarized before the Notary (Public) of the country of his origin and be duly apostillized in accordance with the said Hague Convention-

  • Signature and Address of subscriber on Memorandum and Articles of Association
  • Proof of Identity and Proof of Residence
Resident in a country outside the Commonwealth and which is not a party to the Hague Apostille Convention, 1961 To 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)

  • Signature and Address of subscriber on Memorandum and Articles of Association
  • Proof of Identity and Proof of Residence
Visited India for incorporating a Company Incorporation is allowed without any Notarization or Apostille or Consularization if –

  • Subscriber is having Valid Business Visa

Note: if Person is of Indian Origin or Overseas Citizen of India, requirement of business Visa shall not be applicable.

The following documents are required as per Companies Act, 2013/MCA (Ministry of Corporate Affairs, India)

INCORPORATION OF A FOREIGN SUBSIDIARY COMPANY.

1. Board Resolution for Name Approval in India and Authorized person to subscribe shares (to be Apostilled and Notarized in the Resident Country of Holding company)

2. Certificate of Incorporation or an equivalent document of Holding Company.

3. Chartered Documents (MOA, AOA) of Holding Company.

4. A copy of Company Master details updated in Government Official Website (Like Master details on MCA Portal in India)

5. Latest Utility Bill of Holding Company.

6. Registered Office address with PIN Code and ISO Country Code,

7. Contact Number, ISD Code and Email ID of Holding Company

FOREIGN DIRECTOR/SUBSCRIBER

1. Passport of foreign Director and Foreign Shareholder

2. Driving License of foreign Director and Foreign Shareholder

3. Bank Statement/ Telephone bill/ Mobile Bill/ Electricity bill (Latest one month bill)

4. Passport size photograph of Foreign Director

5. Duration of stay at present address of Foreign Director and place of birth and his Occupation

6. Educational Qualification of Foreign Director

7. Other KYC/Basic details of Subscribers

8. DSC to be applied for subscribers/Authorized Representative and Directors if not availed.

9. Father’s name of the Director

10. Photo of the and Directors.

******

This article is authored by Mrs. Asha Diwakar (Practicing Company Secretary, Bangalore) and co-authored by Priyanka Sethia, who are Co-founders and Designated Partners of M/s CLAAT Corporate Advisors LLP (Chhota CFO). They may be contacted at [email protected] and +91 973 973 6999/ +91 991 666 8146

Priyanka Sethia Asha Diwakar

Disclaimer: Utmost care has been taken to prepare the article. However, inadvertently if any error occurs, please note that the authors shall not be held responsible for any such cause. The content published is only for educational purpose and shall not be construed as rendering of any professional advice in any manner whatsoever. The readers must exercise their own judgement and refer the original source before any implementation. The content is an original work of the authors and may be used only after prior written permission.

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