A foreign subsidiary company is a company wherein 50% or more of its equity of shares are held by a company that is incorporated outside India is a company wherein 50% or more of its equity of shares are held by a company that is incorporated outside India i.e. Foreign
The said foreign company in such case is called the holding or the Parent Company.
Foreign Company is defined under section 2(42) of the companies Act 2013 such a company must follow regulations established under multiple legislations & orders such as
- Companies Act 2013
- FEMS ( Foreign Exchange Management Act, 1999)
- Income Tax Act, 1961
- GST, 2017
- SEBI Rules & Regulations
Remember This While Incorporating A Subsidiary Of A Foreign Company In India :
There shall be minimum 2 directors, one of whom shall be an Indian Resident& other shall be a representative of Foreign Parent Company ( No restriction on Nationality )
At any point of time there shall be minimum 2 shareholders, one of whom shall be the Foreign Parent Company. There is no restriction on the nationality of other shareholders.
There is no minimum share capital requirement for incorporating a foreign subsidiary company
Details & Documents Required For Foreign Parent Company
We Need Apostilled Copy
- Resolution of foreign Company mentioning the name of authorized representative, no. of subscription of shares.
- Charter of Foreign Company (MOA, AOA, Certificate of Incorporation or any other equivalent document as per the country of Incorporation).
- ID Proof of authorized representative, if such person is non – resident of India
- Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, if applicable. ( Non Apostilled Copy )
- Proof of Office address (Conveyance/ Lease deed/ Rent Agreement etc. along with Latest Rent Receipt)
- Latest Utility Bill: Electricity/ Telephone Bill (Not older than 2 months)
- NOC from the owner of the property.
- Contact No. and Email Address
- Proposed Name (maximum 2 names) and Main Object
- Capital Structure (Authorised, Paid-up, value per share and percentage of shareholding of subscribers)
- Specimen signature card for registration with employees’ provident fund organization.
Directors: (self Attested Copy)
- PAN Card and Aadhar Card – for proof of identity
- Mobile Number and Email Id.
- Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, if applicable.
In addition to the above Having DIN, following details are required
- Valid ID Proof: Passport/ Driving License/ Voter ID
- Latest Address Proof: Bank Statement/ Telephone Bill/ Electricity Bill/ Mobile Bill (Not older than 2 months)
- 1 Passport size photograph
- Education Qualification and Occupation
- Place of Birth
- Duration of Stay at current address (in years and months)
- self attested copy
- PAN Card and Aadhar Card
- Valid ID Proof: Passport/ Driving License/ Voter ID
- Latest Address Proof: Bank Statement/ Telephone Bill/ Electricity Bill/ Mobile Bill (Not older than 2 months)
- Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, if applicable.
Incorporation Of A Foreign Subsidiary Company Is A Two-Step Process
- Name Approval in form Spice+ Part A
- Filing of Incorporation forms i.e. Spice+ Part B, Agile Pro, MOA, AOA and INC-9
The Incorporation forms are digitally signed by the Authorised representative, Directors and subscribers with class-III DSC.
Upon successfully filing the Incorporation forms, Certificate of Incorporation, PAN and TAN will be issued by the MCA.
Post Incorporation Compliances :
A subsidiary of a foreign company in India is required to adhere with all the mandatory compliances under various acts that are applicable to other private limited companies.
Additionally it is required to fulfill the below mentioned compliances mandated by RBI:
- Provide details to RBI in “Advance Reporting Form” within 30 days from receiving funds from foreign investors.
- Issue shares within 180 days from the date of receiving funds.
- File a report to RBI in form FC-GPRwithin 30 days from the date of issue of shares accompanied with:
- A Certificate from the Practicing Company Secretary certifying that the company has complied with the procedure for issue of shares as laid down under the Foreign Direct Investment (FDI) Scheme, and
- A certificate from a Practicing Chartered Accountant indicating the manner of arriving at the price of the shares issued to the foreign investors.
- File Annualreturn on Foreign Liabilities and Assets (FLA Return) reporting all the investments received during the year on or before 15th July after the end of every financial year.