Setting up Subsidiary Company in India

Foreign Direct Investment has played a crucial role in introducing the latest and updated technology to the target country. For developing country it is not only mean of upraising revenue but also bring the economic to the phase of development. In India, there are many subsidiary segments running under the different foreign companies. India being as one of the emerging segments of commerce and trade; welcome companies from all across the world. In last decade; several types of foreign companies have entered into India while opening their subsidiaries in India.

Subsidiary company is that corporate segment which is controlled, managed and administered by its parent country which is located in different country than of subsidiary country. Any of the foreign company can open its subsidiary in India with 100 % share holding. But there are certain types of companies that are not allowed to carry their subsidiaries in India as per the slab mentioned by Reserve Bank of India. With getting the permission by RBI one can file an application for setting up subsidiary company in India. If the subsidiary company is not from the negative sector then it can easily apply for registration of wholly owned subsidiary company in India and if the same subsidiary is from any negative sector as per slab then it need to take approval from Foreign Investment Promotion Board.

• First it is important to decide the location and region where you want to open your subsidiary in India.
• Then design it corporate structure and hierarchy of management.
• Prepare the agreement for initial share holding that defines the board of owners and management team.
• Prepare the agreement from initial director.
• Get select the managing director as per the prepared agreement.
• Get select the board of director as per the prepared agreement.
• Define the control system of subsidiary system which should legal and wise.
• Get prepare with proofs of intellectual property ownership.
• Get prepare with delegation of intellectual property.
• Define the complete data of operations and corporate deals of the same subsidiary.
• Get prepare with R & D Agreement Provision.
• Make the complete provisions of moral right issues and employment issues.
• Define how to use of Mauritius Intermediate Subsidiary
• Define the agreement of stock options for employees in India.

How to set up a subsidiary company

• Whole owned subsidiary company can be registered as public firm, private or sole proprietorship company. For set up of subsidiary company in India it takes around 15 working days. First it requires getting agreement between parent company and initial director and sharing holders of the subsidiary company.
• Get select the name of the subsidiary company and file an application to the ROC for its approval.
• After getting approval; prepare with the file including legal forum for company incorporation as setting up of subsidiary company in India.
• Get prepare with the Memorandum of Association and Articles of Association and other legal documents that need to submit to the concern authority during the time of file an application for company formation.
• Submit the fees and stamp duty for setting up of subsidiary company in India.
• Now time come to appoint initial directors and issuance of shares to initial share holders.
• After verification of all the legal documents a certificate of subsidiary company registration is provided to the directors.
• Whereafter can apply for certificate of commencement of business by file an application to the same ROC.

• Open bank account for subsidiary financial transactions within 15-30 days of start.
• File an application for permanent account number and tax for tax registrations that should be made within 45 days.
• Other legal application including Shops and Establishment act, sales tax and professional tax within 30 days.
• If you are from any technological segment then get apply for Software Technology Park within 45 to 90 days in order to reap complete legal benefits.
• Get apply for import / export license and approval from custom department within 60 to 90 days.
• Transfer of all the shares that raised by the side of initial shareholders within 45 days.

For optimal business structure is appropriate to establish a subsidiary or branch in the country. Foundation is usually performed after receiving all the founding documents of a foreign company, which is a Certificate of Incorporation bearing clause and extract translation into India. Certificate of incorporation of a foreign company is negotiating to authorities in the India only valid for certain numbers of months. Subsidiary in India is based either as a new legal entity or transferred all of the shares and the implementation of changes in the ready-made companies, which have sufficient available. Establishing a branch is legally easier, mainly because of non-payment of capital, but branch has limited legal personality. For a subsidiary or branch it will necessary to adhere with each and every section of company act 1956 and other legal rules prescribed under the RBI of India.

Thus, if you are looking to launch your subsidiary in India, or need registration of the subsidiary in India or need to open branch, project or liaison office in India then just call to us where the team of certified attorneys and corporate solicitors will serve you with best services in setting up subsidiary company in India.