With a population of over 1.2 billion people, India is the largest democracy and one of the most promising emerging markets in the world. Therefore, there is immense interest among international businesses to tap the emerging opportunities in India and be among the early movers into the rapidly growing market.
Any foreign company can incorporate a wholly owned subsidiary company in India. In India, private limited companies are a most popular form of business structure and therefore the most obvious choice of foreign companies. In an Indian private limited company, there can two shareholders and two directors and at least one Director should be resident in India.
100% shareholding of an Indian private limited company can be owned by its foreign holding company and the requirement of having at least two shareholders can be fulfilled by giving one share to the nominee of a foreign company. Wholly owned subsidiary company incorporation process is fast and hassle-free and can be completed online. That means the promoters or their nominee doesn’t have to necessarily fly to India to incorporate a wholly owned subsidiary company.
Setting up Subsidiary Company
Foreign Subsidiary will be formed as Private Limited/Public Limited Company and the holding foreign holding company will fund the shareholding. It may be noted that holding company can have 100% to have wholly owned subsidiary including shareholding of nominee shareholders who will be the beneficial shareholder of the company.
The investment limit will be in accordance with the FDI Policy of Government of India, where most of the sectors are under the automatic route.
Requirements for Appointment of Resident Director: As per the requirements of the Companies Act, 2013 every Indian Company should have a Resident Director.
Documents Requirements: Apostle and Notarized Signed Documents are required for foreign Shareholders and Directors. For companies it will be :
Board Resolution duly passed for entering and forming Company in India and in case of Individuals
Passport Copy, Driving Licence and
Current Address proof in the form of Bank Statement is required.
Obtaining Digital Signature of Directors
Obtaining Director Identification Number of Director
Application for Approval of Name of Company, this must be unique Preparation of Incorporation Documents
The signing of Incorporation Documents, this too should be notarized and apostilled Application for Incorporation of Company to Registrar of Companies.
Once this application is approved by registrar we get Certificate of Incorporation along with PAN and TAN (Tax Number in India )
GST Registration: GST Registration is required to be obtained afterward.
Trademark Application: If Company has its own product or brands trademark registration application is required to be applied for securing Companies Intellectual Property.
Under the Automatic Route, the non-resident investor or the Indian company does not require any approval from Government of India for the investment but we need to report to RBI (Central Bank) within 30 Days.
A two-stage reporting procedure has been introduced for the purpose of reporting Foreign Direct Investment in India. First, on receipt of money for investment from a foreign investor, the Company should report to the Regional Office of RBI under whose jurisdiction its Registered Office is located, a report containing information about the investment must be filed. Next on issue of shares to the foreign investor, within 30 days a report in the prescribed format has to be filed with the Regional Office of RBI.
Further, a Certificate from the Company Secretary of the Company accepting investment and a Certificate from Statutory Auditors or Chartered Accountant in the required format is to be submitted.
Foreign Company Compliance in India
Foreign companies registered in India are required to maintain various additional compliance under the Companies Act, 2013.
Foreign companies registered in India are required to file Form FC-1 within a period of thirty days of the establishment of its place of business in India. The application must be supported with an attested copy of approval from the Reserve Bank of India under the terms of Foreign Exchange Management Act or Regulations, and too from other regulators, if any, sanction is necessary.
All foreign companies registered in India are required to organize financial statement of its Indian business operations in an agreement with Schedule III of the Companies Act, 2013. Thus foreign companies are required to furnish the following information/statements together with the financial statements of the company to be filed with the Registrar of Companies:
Statement of associated party transaction, Statement of repatriation of profits
Statement of transfer of funds (including dividends if any) which shall, in the relation of any fund transfer between the place of business of the foreign company in India and any other related party of the foreign company
The documents that are referred to above in this rule must be delivered to the Registrar of Companies within a period of six months from the end of the financial year of the foreign company.
Audit of Accounts of Foreign Company
All foreign companies must get its accounts, pertaining to the Indian business operations organized in agreement with the necessities of clause (a) of sub-section (1) of section 381 and rule 4 and audited by a practicing Chartered Accountant in India.
All foreign companies are required to file with the Registrar of Companies, Form FC-3 detailing the list of places of business of the foreign company along with the financial statements of the company.
The foreign company must prepare and file the annual return of the company in Form FC-4 within a period of sixty days from the final day of its financial year. Any document which should be delivered from a foreign company can be delivered to the Registrar of Companies with jurisdiction over New Delhi.
Authentication of Translated Documents
Documents necessary to be filed with the Registrar of Companies by the foreign company must be in the English language. If any translation is made out of India, it must be authenticated by the signature and the seal of the official with custody of the original or a Notary of the country where the company has been incorporated. Where such translation is made in India, it shall be authenticated by an Advocate, attorney or pleader entitled to appear facing any High Court and an affidavit, of a competent person having, in the estimation of the Registrar.
What is Secretarial compliance?
Secretarial Compliance means the filing of certain forms and information from time to time to central government as a statutory requirement. Below are the basic things that need to be compiled to avoid fines and penalties.
Preparing the directors’ disclosures of interest in other concerns Preparing the declarations from the directors;
Drafting of Board’s report Drafting of Annual return;
Obtaining the financials from Auditor; Email ID of all the proposed directors:
Drafting the minutes for the pre-AGM board meeting. Drafting of Director Report, Annual return and financials. Auditor’s reappointment Document has to be prepared;
Preparation of Fresh Appointment letters to Auditors if any;
Preparation of Annual General Meeting Minutes and related documents;
Preparation and filing of the balance sheet; P&L and Auditors appointment, with the RoC; Filling of AOC 4 , ADT 1 , MGT 7 with their respective attachments.
Statutory Auditing of the Company/LLP up to 300 transaction or 10 Lakhs turnover whichever is earlier.
Accounting Entries will be done by our team up to 300 entries and more than that will be charged at Rupee 1 per entry.
Filling of form “ITR 6” for Income Tax Return with the department with Digital Signature.