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Overview

Indian Subsidiary Company Registration In India

An Indian Subsidiary Company is a company established in India by a foreign corporation. It allows international businesses to expand their operations into India while benefiting from limited liability and a separate legal identity. Governed by the Companies Act, 2013, an Indian Subsidiary can operate as a Private Limited Company, giving it the advantages of limited liability and easier access to the Indian market. The foreign parent company typically owns the majority (over 50%) of the subsidiary's shares, giving it control while the subsidiary retains operational independence. This setup is popular with foreign investors as it enables them to tap into India’s growing economy under a locally recognized structure.

Why Registration is Important

  1. Market Expansion : Provides a structured entry into the Indian market, enhancing access to local customers.
  2. Limited Liability : Protects the foreign parent company’s assets, limiting liability to the subsidiary’s investments.
  3. Tax Benefits : Access to India’s corporate tax structure and Double Taxation Avoidance Agreements (DTAAs).
  4. Legal Recognition : Establishes a separate legal entity, enabling the subsidiary to conduct business, enter contracts, and hold assets.
  5. Operational Independence : Enables streamlined operations with local governance while the parent company retains control through shareholding.



Documents Required

To register an Indian Subsidiary Company, the following documents are generally required

For Foreign Directors

For Indian Directors

For Registered Office

Additional Documents



Procedures

The procedure to register an Indian Subsidiary Company involves the following steps

  • DSC
    Obtain Digital Signature Certificate.
    All directors must obtain a DSC, which is used for signing electronic documents.
  • DIN
    Obtain Director Identification Number
    Apply for DIN for all proposed directors using the SPICe+ form.
  • Name Reservation
    Name Reservation
    File the SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) Part A form to reserve a unique name for the Indian Subsidiary Company.
  • MOA and AOA
    Drafting of MOA and AOA
    The Memorandum of Association (MOA) should specify the company’s objectives, which should align with the parent company’s business. The Articles of Association (AOA) outlines the company’s governance structure.
  • Filing of Incorporation Forms
    Filing of Incorporation Forms
    Complete SPICe+ Part B for company incorporation, providing details of the company’s directors, shareholders, and registered office.
  • Certificate of Incorporation
    Obtain Certificate of Incorporation
    Once all the documents are verified, the Registrar of Companies (ROC) issues the Certificate of Incorporation, officially recognizing the Indian Subsidiary Company.
  • Apply for PAN and TAN
    Apply for PAN and TAN
    The company automatically receives its PAN and TAN along with the Certificate of Incorporation.
  • Bank Account
    Opening of Bank Account
    The subsidiary company can open a bank account in India to commence its operations.
  • FEMA Compliance
    FEMA Compliance
    If the parent company is making a direct investment, ensure compliance with the Foreign Exchange Management Act (FEMA) regulations.
  • Commencement of Business
    Commencement of Business
    File Form INC-20A (Declaration of Commencement of Business) within 180 days of incorporation.


Features

Features & Benefits of Indian Subsidiary Company in India

Separate Legal Entity
The subsidiary operates as a distinct legal entity under Indian law, independent of the parent company.
Prev Next
Limited Liability
The liability of the subsidiary is limited to the extent of its share capital, protecting the parent company’s assets from business liabilities.
Prev Next
Ownership Structure
The parent company holds a majority of the shares, typically 100% FDI is allowed under the automatic route in most sectors.
Prev Next
Tax Resident in India
The subsidiary is considered a resident for tax purposes in India and is subject to Indian corporate tax rates.
Prev Next
Compliance with Indian Laws
The subsidiary must adhere to all Indian laws, including the Companies Act, FEMA, and Income Tax Act.
Prev Next

Subsidiary Company Registration in India

Easier Market Access
The subsidiary enjoys access to the Indian market and can engage in various business activities.
Prev Next
Repatriation of Profits
Profits can be repatriated to the parent company after meeting all tax obligations in India.
Prev Next
Funding Flexibility
The subsidiary can raise funds in India through equity, debt, or loans from the parent company.
Prev Next
Local Employment Opportunities
The subsidiary can hire local employees in India, contributing to job creation and benefiting from the local workforce.
Prev Next
Independent Operations
The subsidiary operates independently of the parent company, allowing it to make business decisions aligned with local market conditions and regulations.
Prev Next


Comparison between Indian Subsidiary, Branch Office And Liaison Office

Features Indian Subsidiary Branch Office Liaison Office
Legal Status Separate Legal Entity Not a Separate Legal Entity Not a Separate Legal Entity
Liability Limited to the subsidiary’s assets Parent company liable for all actions Parent company liable for all actions
Taxation Indian corporate tax rates Indian corporate tax rates Not taxable (no income-generating activities)
Business Activities Wide range of activities permitted Limited to activities approved by RBI Limited to liaison activities
Repatriation of Profits Allowed after tax Allowed after tax No profits, only expense reimbursement
Funding Equity, debt, or loans from parent Funding from parent company Funding from parent company
Compliance Requirements High High Low
Approval Authority Registrar of Companies (ROC) Reserve Bank of India (RBI) Reserve Bank of India (RBI)


Frequently Asked Questions

What is the minimum number of directors required for an Indian Subsidiary?

A minimum of two directors is required, with at least one being an Indian resident.

Can a foreign company own 100% of an Indian Subsidiary?

Yes, a foreign company can own 100% of an Indian Subsidiary, subject to FDI regulations and sector-specific guidelines.

What is the tax treatment for an Indian Subsidiary?

An Indian Subsidiary is treated as a domestic company and is subject to Indian corporate tax rates. It can also benefit from the Double Taxation Avoidance Agreement (DTAA).

Is it mandatory to have an Indian director for an Indian Subsidiary?

Yes, it is mandatory to have at least one Indian resident director on the board of an Indian Subsidiary.

What are the compliance requirements for an Indian Subsidiary?

The subsidiary must comply with Indian corporate laws, including filing annual returns, conducting audits, and holding board meetings. Compliance with FEMA regulations is also necessary for foreign investments.

Can the profits of an Indian Subsidiary be repatriated?

Yes, profits can be repatriated to the parent company after fulfilling all tax obligations and adhering to FEMA guidelines.

Overview

Indian Subsidiary Company

An Indian Subsidiary Company is a company established in India by a foreign corporation. It allows international businesses to expand their operations into India while benefiting from limited liability and a separate legal identity. Governed by the Companies Act, 2013, an Indian Subsidiary can operate as a Private Limited Company, giving it the advantages of limited liability and easier access to the Indian market. The foreign parent company typically owns the majority (over 50%) of the subsidiary's shares, giving it control while the subsidiary retains operational independence. This setup is popular with foreign investors as it enables them to tap into India’s growing economy under a locally recognized structure.

Why Registration is Important

  1. Market Expansion : Provides a structured entry into the Indian market, enhancing access to local customers.
  2. Limited Liability : Protects the foreign parent company’s assets, limiting liability to the subsidiary’s investments.
  3. Tax Benefits : Access to India’s corporate tax structure and Double Taxation Avoidance Agreements (DTAAs).
  4. Legal Recognition : Establishes a separate legal entity, enabling the subsidiary to conduct business, enter contracts, and hold assets.
  5. Operational Independence : Enables streamlined operations with local governance while the parent company retains control through shareholding.

Documents Required

To register an Indian Subsidiary Company, the following documents are generally required

For Foreign Directors

For Indian Directors

For Registered Office

Additional Documents

Procedures

  • DSC
    Obtain Digital Signature Certificate
    All directors must obtain a DSC, which is used for signing electronic documents.
  • DIN
    Obtain Director Identification Number
    Apply for DIN for all proposed directors using the SPICe+ form.
  • Name Reservation
    Name Reservation
    File the SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) Part A form to reserve a unique name for the Indian Subsidiary Company.
  • MOA and AOA
    Drafting of MOA and AOA
    The Memorandum of Association (MOA) should specify the company’s objectives, which should align with the parent company’s business. The Articles of Association (AOA) outlines the company’s governance structure.
  • Incorporation Forms
    Filing of Incorporation Forms
    Complete SPICe+ Part B for company incorporation, providing details of the company’s directors, shareholders, and registered office.
  • Certificate of Incorporation
    Obtain Certificate of Incorporation
    Once all the documents are verified, the Registrar of Companies (ROC) issues the Certificate of Incorporation, officially recognizing the Indian Subsidiary Company.
  • PAN & TAN
    Apply for PAN and TAN
    The company automatically receives its PAN and TAN along with the Certificate of Incorporation.
  • Bank Account
    Opening of Bank Account
    The subsidiary company can open a bank account in India to commence its operations.
  • FEMA Compliance
    FEMA Compliance
    If the parent company is making a direct investment, ensure compliance with the Foreign Exchange Management Act (FEMA) regulations.
  • Commencement of Business
    Commencement of Business
    File Form INC-20A (Declaration of Commencement of Business) within 180 days of incorporation.

Features

Features & Benefits of Indian Subsidiary Company Registration

Separate Legal Entity

The subsidiary operates as a distinct legal entity under Indian law, independent of the parent company.

Limited Liability

The liability of the subsidiary is limited to the extent of its share capital, protecting the parent company’s assets from business liabilities.

Ownership Structure

The parent company holds a majority of the shares, typically 100% FDI is allowed under the automatic route in most sectors.

Tax Resident in India

The subsidiary is considered a resident for tax purposes in India and is subject to Indian corporate tax rates.

Compliance with Indian Laws

The subsidiary must adhere to all Indian laws, including the Companies Act, FEMA, and Income Tax Act.

Easier Market Access

The subsidiary enjoys access to the Indian market and can engage in various business activities.

Repatriation of Profits

Profits can be repatriated to the parent company after meeting all tax obligations in India.

Funding Flexibility

The subsidiary can raise funds in India through equity, debt, or loans from the parent company.

Local Employment Opportunities

The subsidiary can hire local employees in India, contributing to job creation and benefiting from the local workforce.

Independent Operations

The subsidiary operates independently of the parent company, allowing it to make business decisions aligned with local market conditions and regulations.

Comparison between Indian Subsidiary, Branch Office And Liaison Office

Features Indian Subsidiary Branch Office Liaison Office
Legal Status Separate Legal Entity Not a Separate Legal Entity Not a Separate Legal Entity
Liability Limited to the subsidiary’s assets Parent company liable for all actions Parent company liable for all actions
Taxation Indian corporate tax rates Indian corporate tax rates Not taxable (no income-generating activities)
Business Activities Wide range of activities permitted Limited to activities approved by RBI Limited to liaison activities
Repatriation of Profits Allowed after tax Allowed after tax No profits, only expense reimbursement
Funding Equity, debt, or loans from parent Funding from parent company Funding from parent company
Compliance Requirements High High Low
Approval Authority Registrar of Companies (ROC) Reserve Bank of India (RBI) Reserve Bank of India (RBI)

Frequently Asked Questions

What is the minimum number of directors required for an Indian Subsidiary?

A minimum of two directors is required, with at least one being an Indian resident.

Can a foreign company own 100% of an Indian Subsidiary?

Yes, a foreign company can own 100% of an Indian Subsidiary, subject to FDI regulations and sector-specific guidelines.

What is the tax treatment for an Indian Subsidiary?

An Indian Subsidiary is treated as a domestic company and is subject to Indian corporate tax rates. It can also benefit from the Double Taxation Avoidance Agreement (DTAA).

Is it mandatory to have an Indian director for an Indian Subsidiary?

Yes, it is mandatory to have at least one Indian resident director on the board of an Indian Subsidiary.

What are the compliance requirements for an Indian Subsidiary?

The subsidiary must comply with Indian corporate laws, including filing annual returns, conducting audits, and holding board meetings. Compliance with FEMA regulations is also necessary for foreign investments.

Can the profits of an Indian Subsidiary be repatriated?

Yes, profits can be repatriated to the parent company after fulfilling all tax obligations and adhering to FEMA guidelines.

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