Saturday, March 2, 2024
Saturday, March 2, 2024

What are the Documents Required for Indian Subsidiary Company Registration?

by Vartika Kulshrestha
Indian Subsidiary Company

The registration of an Indian subsidiary company in India is a strategic move that opens doors to the vast and dynamic Indian market. This article explores the comprehensive list of documents essential for the successful establishment of a subsidiary company under the purview of the Companies Act, 2013. These documents encompass legal, financial, and identity-related requisites, ensuring compliance with Indian regulations. Understanding the intricacies of a subsidiary company registration is pivotal for foreign entities seeking to expand their operations, as it offers limited liability protection, tax advantages, and access to India’s thriving consumer base. In this article, we delve into the exhaustive details of each document’s significance in the registration process, providing valuable insights for prospective investors.

Key Characteristics of Indian Subsidiary Company

Key characteristics about subsidiary companies in India include:

Separate Legal Entity: 

An Indian subsidiary company is considered a separate legal entity from its parent company. It possesses distinct assets, responsibilities, and legal commitments. This separation provides a protective measure for the assets of the parent company should the subsidiary face financial or legal difficulties.

Control: 

The parent company wields significant control over the subsidiary, often achieved through its majority ownership of the subsidiary’s shares. This authority empowers the parent company to shape strategic choices and impact the subsidiary’s day-to-day operations.

Limited Liability: 

Shareholders of an Indian subsidiary company have limited liability, meaning their personal assets are generally not at risk in case the subsidiary faces financial difficulties or legal claims.

Independent Management: 

While the parent company maintains control, the subsidiary generally operates with its own dedicated management team and board of directors, tasked with overseeing its daily activities.

Financial Reporting: 

Subsidiary companies are required to maintain separate financial records and report their financial performance independently from the parent company.

Taxation: 

Subsidiary companies in India are subject to corporate income tax and must file their tax returns separately from the parent company. India offers various tax incentives and benefits to encourage foreign investment in subsidiary companies.

Compliance: 

Similar to other Indian enterprises, subsidiary firms are obligated to adhere to Indian legislations and standards, encompassing those pertaining to corporate governance, financial disclosure, and workforce management.

Why Establish an Indian Subsidiary Company?

Here are key reasons why companies choose to set up subsidiary entities in India:

  • Market Entry: India provides entry to an expansive and swiftly expanding market comprising a diverse consumer demographic, rendering it an appealing destination for enterprises seeking to broaden their customer base.
  • Limited Exposure: Subsidiary firms afford shareholders limited liability protection, shielding their personal assets from potential business-related risks and losses.
  • Tax Benefits: India offers various tax incentives and benefits to encourage foreign investment, which can lead to potential tax savings for subsidiary companies.
  • Independent Operations: Subsidiaries operate independently, allowing for localized decision-making, flexibility in adapting to local market conditions, and compliance with Indian regulations.
  • Asset Protection: A subsidiary in India can help protect the parent company’s assets by isolating them from potential legal or financial liabilities in other parts of the world.

Documents Required For Indian Subsidiary Company Registration

For the registration of Indian subsidiary company, it is imperative to compile and submit a specific set of documents to the pertinent authorities, chiefly the Registrar of Companies (ROC). Here is a list of the essential documents required for Indian subsidiary company registration:

Memorandum of Association (MOA): This is a legal document that delineates the company’s goals, the extent of its business activities, and the connection between the company and its shareholders.

Digital Signature Certificate (DSC): A digital certificate issued by authorized agencies that allows directors and authorized signatories to sign documents electronically, required for online filings with government authorities.

Address Proof for Registered Office: Documents such as a lease agreement, rent receipt, or utility bill to confirm the registered office address.

Identity Proof of Directors and Shareholders: Identity documents like Aadhaar cards, passports, or driver’s licenses for all directors and shareholders.

Articles of Association (AOA): This document provides a framework outlining the internal rules, regulations, and operational procedures governing the company’s management and activities.

Passport-sized Photographs: Recent passport-sized photographs of directors and shareholders.

PAN and TAN Applications: Applications for obtaining the Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for the subsidiary, issued by the Income Tax Department.

Consent Forms and Affidavits: Documents where directors declare their willingness to act as directors and confirm they are not disqualified under the law.

No Objection Certificate (NOC) for Registered Office (if applicable): A document stating that the owner of the registered office premises has no objection to the company using it as the registered office.

Board Resolution Authorizing Subsidiary Establishment: A resolution passed by the board of directors of the parent company, authorizing the establishment of the subsidiary.

Power of Attorney (if applicable): A legal document granting authority to one of the directors or an authorized signatory to act on behalf of the company for specific legal matters.

Capital Structure Details: Documents specifying the authorized and subscribed share capital, along with details of shareholders and their shareholdings.

Director Identification Number (DIN): This is a distinctive identification number bestowed by the Ministry of Corporate Affairs (MCA) upon all directors. Directors must apply for DIN, and the number is used for regulatory filings.

Incorporation Forms (e.g., SPICe): Various incorporation forms required for registering the subsidiary with the Registrar of Companies (ROC).

Statutory Compliance Documents: Documents demonstrating compliance with statutory requirements, including proof of stamp duty payment.

Financial Statements and Reports of the Parent Company: : Copies of the parent company’s financial statements and reports are needed to evaluate its financial stability and performance.

Trademark Registration Documents (if applicable): Documents related to the registration of trademarks if the subsidiary plans to use specific trademarks.

Other Documents (if applicable): Additional documents may be required based on the nature of the business and industry-specific regulations.

Conclusion

The process of registering an Indian subsidiary company in India is a strategic undertaking that grants entry to a thriving market, shields against extensive liabilities, and potentially yields tax advantages. The careful compilation and submission of the necessary documents, as detailed in this article, are pivotal for facilitating a smooth registration process. India’s dynamic business environment presents a multitude of growth prospects, rendering it an enticing destination for both local and foreign investors. By adhering to regulatory prerequisites and seeking expert counsel, enterprises can adeptly navigate the intricacies of Indian subsidiary company registration, positioning themselves for prosperity in this promising and dynamic market.

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