Foreign Subsidiary Company Registration - Eligibility, Process, and Documents

Foreign Companies wishing to start their business operations in India through a distinctly operating legal entity can do so in two ways - by establishing a Joint Venture or a Wholly-Owned Indian Subsidiary. The key difference between the two lies in their ownership structure. While a joint venture allows the parent company to have 50% or more stakes in its Indian counterpart, the wholly-owned Indian Subsidiary allows 100% ownership of the foreign company. As a result, the subsidiary can only be opened in sectors where 100% FDI is permitted by the Indian Government. At Bizfoc, we help companies identify such industries and set up wholly-owned subsidiaries in India. Our assistance extends to consultation on FDI limits, registration process, and document legalization and submission. Consult us Now!

What is a Wholly-Owned Foreign Subsidiary Company?

A wholly-owned foreign subsidiary company is a company established by a foreign entity in India where it holds 100% shares. It is regulated by the Companies Act, 2013, and has the same features as any other domestic company registered by the ROC (Registrar of Companies). Further, the process of foreign subsidiary company registration is also similar to other domestic companies which indicates that the subsidiary operates as a distinct legal entity from its foreign parent. A foreign subsidiary company is opened when the concerned foreign entity wishes to expand its business operations in India through a corporate structure liable for its acts and finances.

Eligibility for Foreign Subsidiary Company Registration

Wholly-owned foreign subsidiary company registration in India requires a few criteria to be met. Let’s have a look at these requirements in detail.

• A Foreign Holding Company: A Wholly-owned foreign subsidiary company must be established by a company registered in a foreign country. This company is termed as its parent. The Companies Act, Section 2(42) defines a foreign company as a company incorporated or registered outside India, that has a place of business in India and carries out its business activities therein. Further, a holding company is defined as a company that holds majority stakes in its subsidiary, which in the case of a foreign WOS is 100%.
• 100% FDI Permitted: The wholly-owned foreign subsidiary company must be established in a sector that is permitted to receive 100% foreign direct investment in India. As per the latest FDI policy, 100% FDI can be received under two routes - namely, the automatic route where no regulatory approvals are required, and the approval route where FDI beyond the prescribed limit requires prior approval from the Central Government. Sectors where approval is required include defense, print and digital media, broadcast services, healthcare, multi-brand retail trading, and pharmaceuticals. Besides, FDI from countries that share a land border with India requires prior approval too.
• Representatives of the Foreign Parent: The application for foreign subsidiary company registration must be signed by at least two representatives of its foreign parent. They can either be the parent company’s directors, shareholders, or key managerial officers. Further, their residential or nationality status does not matter, indicating that even foreign nationals or non-resident Indians can become the authorized representatives of the foreign company for this purpose.
• Indian Resident Director: The foreign subsidiary company must have at least one Indian resident director. The Companies Act defines a resident director as an individual whose total stay period in India exceeds 120 days in the previous financial year. Besides, a minimum of 2 directors shall be required if the foreign subsidiary is being incorporated as a Pvt Limited company. This number extends to 3 directors if the incorporation is done as a Public Limited Company. The resident director is appointed by the parent company and is responsible for meeting compliance requirements set forth by Indian regulatory authorities.
• A Unique and Valid Name: The foreign subsidiary company usually carries the same name as its parent company, with “India” added as a suffix. Besides, the name must be indicative of the company’s incorporated structure as well. If the company is incorporated as a Private Limited entity, the suffix “Pvt Limited”, “Private Limited”, or “Pvt Ltd” must be added as a suffix. However, if the incorporated structure is a Public Limited entity, the suffix “Limited” is added. The name must be approved by the ROC as well.
• A Registered Office in India: The foreign subsidiary company must have a registered office in India. This office acts as a correspondence for all official purposes. Also, the subsidiary company must maintain all its accounts and records at the registered office for inspection purposes. The office must be located on a commercial or residential property and must be fully constructed and lockable for privacy and security reasons.

Foreign Company Subsidiary Registration Process in India

Here’s a detailed breakdown of the steps involved in foreign subsidiary company registration in India:

Step 1: Pass a Board Resolution & Legalize It

The Board of Directors of the parent company must pass a resolution to approve the opening of an Indian subsidiary company. A copy of the resolution must be legalized by a public notary, apostille office, or Indian Embassy in the country of origin, as applicable. Further, the board must also select an authorized signatory to sign the foreign subsidiary company registration application.

Step 2: Apply for DIN and DSC

Directors appointed in the foreign subsidiary company must apply for Director Identification Numbers (DIN) if they do not already have one. DIN is necessary for all directors to hold their office in an Indian Subsidiary Company. It is allotted by the MCA after an application is filed in DIR-3 form. Also, the authorized signatories must apply for digital signatures (DSC) to authenticate the application for foreign subsidiary company registration.

Step 3: Apply for ROC Approval of Indian Subsidiary Company Name

We’ve already discussed how to select the Indian subsidiary company’s name. Once the selection is made, an application in SPICE Plus Part A is filed to seek ROC approval. If the ROC approves of the name, a name approval letter shall be issued with a validity of 20 days. The foreign subsidiary company registration process must be completed within these 20 days. Failure to do so can render the approval letter null and void.

Step 4: Draft MOA and AOA of the Indian Subsidiary Company

Memorandum and Articles of Association (MOA and AOA) are major constitutional documents of the foreign subsidiary company. While the MOA establishes its legal identity, the AOA draws the rules and regulations of its internal management. Both these documents are submitted to the ROC with the registration application, hence it is ideal to draft them beforehand.

Step 5: Legalize Foreign Subsidiary Company Registration Documents

The ROC does not accept documents of foreign origin and execution. Therefore, before filing the foreign subsidiary company registration form, the applicant must legalize the MOA, AOA, and a fresh copy of the Board Resolution. Legalization can be done by the public notary, Apostille Office, or the Indian Embassy, as applicable.

Step 6: Apply for Foreign Subsidiary Company Registration

After all the documents have been prepared and legalized, the applicant can apply for Foreign subsidiary company registration in the SPICE Plus form (PART-B). SPICE Plus is an integrated application for registration of foreign subsidiary company in India, its PAN, TAN, EPF registration, ESI registration, Professional tax registration, and more. All the details must be filled correctly, the documents uploaded carefully, and the authorized signatory’s DSC attached for authentication. Finally, the form must be submitted online with the Indian Subsidiary Company registration fees.

Step 7: Issuance of Registration Certificate

The ROC examines the application filed by Indian Subsidiary of Foreign Company thoroughly and upon verifying all the details, issues a Certificate of Registration and CIN (Corporate Identification Number) in its name. Additionally, it receives PAN and TAN from the Income Tax Department. The foreign subsidiary company registration Certificate remains valid for as long as the company exists, without any need for renewal.

Documents Required for Foreign Subsidiary Company Registration

The complete list of documents required for foreign subsidiary company registration below, divided into categories - documents of the foreign parent company, the authorized signatory, and the registered office.

Document of the Foreign Holding Company:

1. Certificate of Incorporation
2. Memorandum and Article of Association (MOA & AOA)
3. Address Proof of Registered Office in the Country of Origin (Utility Bills less than 2 months old, Rent/ Lease Agreement, Property Tax Receipt)
4. Detailed list of Directors and Shareholder

Documents of the Authorized Signatories:

1. Colored Photographs
2. Passport
3. National ID Card
4. Personal Address Proof
   (Utility Bills less than 2 months old, Rent/ Lease Agreement, Property Tax Receipt / Bank Statement)

Documents of the Registered Office in India:

1. Address Proof
   (Utility Bills less than 2 months old, Rent/ Lease Agreement, Property Tax Receipt)
2. No Objection Certificate (NOC) from the premises owner

Note on Legalization of Documents for Foreign Subsidiary Company Registration
The parent company’s and authorized signatory’s documents have a foreign origin and execution. So, they must be legalized to be acceptable by Indian authorities such as the ROC. There are three ways of doing so. If the country of origin is a Commonwealth Group member, a public notary will legalize the documents. If the country of origin is a party to the Hague Convention, legalization will be done by the Apostille Office. In none of the above cases, legalization can be done by the Indian Embassy. Once the documents are legalized, they must be attested by the appropriate authority in India.

Foreign Subsidiary Company Registration Services - Bizfoc

At Bizfoc, we specialize in comprehensive foreign subsidiary company registration services, tailored to meet the unique business expansion needs of foreign businesses. Our expert team ensures a seamless registration process, handling everything from legal documentation and compliance to local regulatory approvals. What sets us apart is our deep understanding of international business environments, Indian corporate laws, personalized consulting approach, and unwavering commitment to delivering swift, hassle-free setups. Partner with Bizfoc for a stress-free experience of foreign subsidiary company registration in India.

Conclusion

A Foreign Subsidiary Company Registration is an ideal gateway for a foreign company to establish its business in India. It offers key features of a Limited company such as restricted liability, distinct legal identity, indefinite existence, and a Board of Directors appointed to control the internal management. Besides, the foreign company enjoys full ownership of its Indian subsidiary, without the responsibility to pay off its debts and liabilities. The subsidiary maintains its accounts separately and operates under Indian Company laws. Setting up the Indian Subsidiary of a Foreign Company offers immense advantages given India’s enhanced ease of doing business and corporate-friendly environment.

FAQs