Subsidiary Of Foreign Company

One of the most effective ways to register a foreign company is by forming a private limited company. Unlike proprietorships, partnership firms, or one-person companies, foreign direct investment (FDI) is allowed in private limited companies through the automatic route. This streamlined process makes registration quicker and more efficient.

In addition to being the preferred structure for foreign registration, private limited companies offer several advantages. These include limited liability for members, the flexibility typically associated with partnerships, and the stability and distinct legal identity of a corporation. This makes private limited companies an ideal choice for startups looking to secure funding from financial institutions.

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Benefits

Separate Legal Entity

In India, a company is a legal entity and a juristic person. It has wide legal capacity and can even own property.

Limited Liability

The Directors or Shareholders of the company have no personal liabilities.

Easy Borrowing

Banks and VCs prefer to render large financial assistance to a company.

Perpetual Succession

Private limited companies enjoy business continuity because the company is its own legal entity.

Tax Advantages

A company opens the door to more tax-deductible costs and allowances redeemable against profits.

Increased Expansion Scope

India has a sizeable market that will enable foreign businesses to expand their revenues and effectiveness.

Dual Relationship

A person can at the same time be a shareholder, director, creditor and employee of the company.

Capacity to sue and be sued

A company in India being an independent legal entity can sue and also be sued in its own name.

Documents required

For Directors/Shareholders

One Photograph
Copy of Passport
Copy of Address proof – Driving License/Voter ID
Copy of Bank Statement/Mobile Phone/Landline Telephone Bill
Copy of Business Visa and Proof of Stay in India

NOTE: All the above documents should be notarized by a Public Notary and Appostilled/Consularized by the Competent Authority of the foreign country.

For Company Address

Proof of Registered Address – Sale Deed/Rental Agreement
Copy of Utility bill – Electricity/Landline telephone/Gas Bill – not older than two months.
No Objection Certificate for use of premises, if required

List of Incorporation documents to be executed:

Articles of Association
Memorandum of Association
Declaration by Directors in form DIR 2
Declaration of Directors/Shareholders and Authorized Representative in Form INC 9
PAN Undertaking from foreign company and directors

Generally, the incorporation documents are required to be self-attested by Indian Nationals. However, in case of Foreign Nationals, the process is as under:

If the documents are signed outside India, then the same have to be notarized by a Public notary of the residence country and consularized or apostilled by the competent authority, as the case may be.
If the documents are signed in India, then copy of Visa and stamped passport, proving his/her presence in India at the time of signing is required.
If the subscriber is a foreign entity, then the Incorporation documents should be signed by the representative of the foreign entity. An Authorization Letter duly stating the name of the Authorized Person and the number of shares subscribed should be notarized, consularized or apostilled, as the case may be in the home country of the subscriber company.

Once the Incorporation application is approved, the Registrar would issue a Certificate with a Corporate Identification Number (CIN). The PAN and TAN of the Company would also be allotted simultaneously.