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Over the time we at Company360.in get a lot of request for incorporation of a subsidiary company in India.
Let us understand how to get it done. Starting with basic let us first understand the definition first.
Holding Company and subsidiary company
A holding and subsidiary relation between companies arises when a company holds a certain prescribed percentage of shares in another company.
A Holding company is one which holds shares in another company(also known as Subsidiary company) and a subsidiary company is one whose shares are held by another company(also known as holding company).
What is subsidiary private limited company or 100% subsidiary of a private limited company?
A subsidiary company is the one whose more than 51% share is held by any other company and where in case if 100% shares are held by other company, that makes the other company a 100% subsidiary private limited company.
Aforesaid relation between companies is called a holding-subsidiary company.
For example:- if A private limited has 100% shares of B Private limited, then B private limited is called subsidiary of A private limited.
What is foreign subsidiary private limited company or 100% foreign subsidiary private limited company?
Where in case more than 51% shares are held by foreign company i.e. by any company registered outside India, that company is called as foreign subsidiary company. In case the shareholding is 100% then it is called as 100% foreign subsidiary private limited company.
The procedure of registering a subsidiary company is very simple and more or less same as normal private limited company. But there are few concerns to be cautious about in case of these companies such as
In case of 100% subsidiary private limited company, 99.99% shareholding is taken by another private limited company and .1% shareholding is held by another to fulfill the condition of minimum requirement of 2 shareholders in a private limited company.
In case of 100% foreign subsidiary private limited company, first thing to be checked, is whether the Government of India allows 100% FDI in that sector or not. If the 100% FDI is allowed in that particular sector, then one can initiate the same incorporation of 100% foreign subsidiary private limited company.
Another important factor under this incorporation is that one of the directors in private limited company shall be a resident in India as this is also a mandatory requirement for private limited company registration.
Fees for company incorporation of 100% subsidiary company is little high as per Companies Act, 2013 subsidiary company is being excluded from the definition of small company and it doesn’t fall under the category of fees applicable to small companies.
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REQUIREMENTS of Foreign Subsidiary in India
Requirements for registering a 100% foreign subsidiary company in India can be summed up in following six points:
Documents will remain same as of required for any normal company for Indian resident.
In case of foreign director, the document requirements will remain same but all documents should be apostilled from Indian embassy of that country and one needs that original apostilled documents before incorporation.
Apart from documents, there are certain documents and declaration of shareholders/Directors that are required to be made during incorporation which are also need to apostille.
In case of Indian subsidiary company,detail and documents of holding company, details and documents of nominee of holding company and true copy of resolution of company for investing shares in other company is also required to be furnished.
In case of foreign subsidiary company, detail and documents of foreign company, details and documents of nominee of foreign company and true copy of resolution of foreign company for investing shares in Indian company is also required.
In case a foreign promoter if signing and subscribing to the Memorandum and Articles of Association outside India then he is required to sign the same before the Indian Consulate present in the Indian Embassy. The Indian Consulate is required to witness the signature of such foreign promoter after payment of necessary fees.
If such Promoter is signing and subscribing in India, then all the documents that he is signing must be notarized and further a copy of the passport declaring his stay in India is required to be produced before the Registrar. Witness to signatures should be made by any person available at the time of execution.