Establishing a subsidiary company can be a strategic move for businesses looking to expand their operations in India. With a rapidly growing economy, a large consumer base, and a business-friendly environment, India offers numerous opportunities for companies to set up subsidiaries. However, before embarking on this journey, it is crucial to understand the process and legal requirements involved in subsidiary company registration in India. In this blog post, we will provide a comprehensive guide to help you navigate through the intricacies of subsidiary company registration in India.
- Definition of a Subsidiary Company: A subsidiary company is a separate legal entity that is controlled by another company, known as the parent company. The parent company holds a majority stake in the subsidiary, giving it the power to control and make decisions on behalf of the subsidiary.
- Types of Subsidiary Companies in India: There are primarily two types of subsidiary companies in India:a)Wholly-Owned Subsidiary: In this type of subsidiary, the parent company holds 100% ownership of the subsidiary. It provides the parent company with complete control over the subsidiary’s operations and decision-making processes.b) Joint Venture: A joint venture subsidiary is established when two or more companies come together to form a separate legal entity. Each company contributes capital, resources, and expertise, and they share the profits, losses, and decision-making responsibilities.
- Legal Requirements for Subsidiary Company Registration: To register a subsidiary company in India, the following legal requirements must be fulfilled:a) Selection of Business Structure: Choose a suitable business structure for your subsidiary, such as a private limited company, limited liability partnership (LLP), or public limited company.b)Name Reservation: Select a unique name for your subsidiary and ensure it complies with the naming guidelines set by the Ministry of Corporate Affairs (MCA). Check for name availability and reserve it through the MCA’s online portal.
c)Obtaining Director Identification Number (DIN): All directors of the subsidiary company must obtain a DIN from the MCA. This unique identification number is mandatory for appointment as a director of any Indian company.
d)Obtaining Digital Signature Certificate (DSC): Apply for a DSC, which is used for electronically signing the documents required for company registration.
e)Memorandum of Association (MOA) and Articles of Association (AOA): Prepare the MOA and AOA which outline the subsidiary company’s objectives, rules, and regulations. These documents must be signed by the directors and shareholders.
f) Share Capital and Shareholders: Determine the authorized and paid-up share capital of the subsidiary. Identify the shareholders and their respective shareholding percentages.
g) Registered Office: Provide a registered office address for the subsidiary company within India. This address will be used for official correspondence.
h) Statutory Registrations: Obtain a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) from the Income Tax Department. Additionally, register for Goods and Services Tax (GST) if applicable to your business activities.
- Company Registration Process: Once all the legal requirements are met, the subsidiary company registration process in India involves the following steps:a) Obtain the Digital Signature Certificate (DSC) for the directors and shareholders.
b) File the application for Director Identification Number (DIN) for the directors.
c) Prepare and file the incorporation documents, including the MoA, AoA, and Form SPICe (Simplified Proforma for Incorporating Company Electronically) with the Registrar of Companies (ROC)
d) Pay the requisite registration fees and stamp duty.
e) Obtain the Certificate of Incorporation and the Corporate Identification Number (CIN) from the ROC.