About Foreign Subsidiary

A Foreign Subsidiary is a company in a form of private limited company that has non-resident body corporate shareholder holding more than 50% of the paid up capital of such company.

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Our Professional Fees : INR 35,400/-

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Our scope of work

    1.  Advisory to Foreing Client;

    1A. Any amount of Capital;

    2. Application for 2 Director Identification Numbers;

    3. Application of 2 Digital Signatures (validity 2 years);

    4. Name Approval;

    5. Drafting of Memorandum and Articles of Association;

    6. Drafting of other additional documents;

    7. Preparation of various eforms;

    8. PAN & TAN Application

    9. Resubmission of eforms, if any;

    10. Obtaining Certificate of Incorporation from Registrar

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Know more about Foreign Subsidiary

Foreign Subsidiary

A Foreign Subsidiary is a company in a form of private limited company that has non-resident body corporate shareholder holding more than 50% of the paid up capital of such company.

 

1. Director:

  • Minimum no. of directors required are 2 out of which 1 shall be Indian Resident.
  • Any person can be a director of the company including family members
  • Director Identification No. (DIN) and Digital Signature Certificate (DSC) are required to be a director of the company
  • Directors are the managers and they are responsible for day to day functioning of the company.

 

2. Shareholder:

  • Minimum no of shareholders required are 2.
  • Director and Shareholders can be the same.
  • Shareholders are the owners of the company.

 

3. Capital:

  • There are 2 types of capital i.e. Authorize Capital (It is the capital up to which company is authorize to raise from the member and it can be increase as and when required.), Paid Up Capital (It is the capital which is paid up by the members of the company and it can be increase as and when required.)
  • There is no such requirement for minimum capital, hence the company can be formed with the capital starting from INR 1.

 

4. Registered Office:

  • Any place can be made as the registered office of the company even the residential place can be used as the registered office of the company.

 

5. Registering Authority

  • Ministry of Corporate Affairs.

 

6. Required Documents

> MOA, AOA & COI of foreign holding Company, attested by director of that company duly translated in English, if not in English language & Certified by Indian Consulate

> If the documents are signed outside India, then the same have to be notarized by a Public notary of the residence country and consularized or apostilled by the competent authority, as the case may be.

> If the documents are signed in India, then copy of Visa and stamped passport, proving his/her presence in India at the time of signing is required.

> Proof of Registered office address (Conveyance/ Lease deed/Rent Agreement/Maintenance Bill)

> Copy of the utility bills of the registered office (Electricity Bill/Telephone Bill not older than two months).

 

    Directors / Shareholders

> PAN Mandatory- Indian National / Passport – Foreign National

> Proof of Identity – Voter Id/Passport/Driving License

> Proof of Address (Electricity Bill/Bank Statement/Telephone Bill/Mobile Bill not older than 2 months)

*All documents for Indian National – To be self-attested

*All documents of Foreign National – To be self-attested & apostilled

Note:

Foreign Subsidiary also need to comply with the Foreign Exchange Management Act, 1999 rules and regulation before making an investment/incorporation in/of subsidiary company in India

All requirements remains same as incorporation of Private Limited Company, except one shareholder who shall be Body Corporate & NR and hold more than 51% of paid up capital of such company.

Obtain Digital Signature Certificate (DSC)

01

Prepare SPICe+ form (Part A – Name availability and reservation request)

02

Prepare SPICe+ Part B form (Company information i.e. directors, capital etc.)

03

Prepare e-form SPICe+ MOA (INC-33) ,SPICe+ AOA (INC-34) and SPICe+ AGILE-PRO (INC-35)

04

Download all the e-forms prepare online and affix DSC on all the e-forms.

05

Attached the require documents with form SPICe+ and upload the e-forms to MCA portal.

06

Verification of documents / forms by RoC

07

Issue of Certificate of Incorporation by RoC

08

Advantages

One of the primary advantages of a foreign-owned subsidiary is that the parent company can still provide guidance, direction and support to its subsidiary. While a subsidiary has the right to develop its own set of business practices, the truth is that your parent company will always have significant influence over the principles, vision, and tactics that govern the subsidiary. That control helps ensure that the subsidiary will operate with the same culture and values as those of the parent company, and will have access to the parent company’s talent pool of experienced executives and rank-and-file employees.
Another advantage of a foreign-owned subsidiary is that the parent company can share its resources, especially the financial systems, administrative services and marketing strategies that have proven successful in the past. Rather than starting from scratch, the subsidiary receives a framework, from which it can quickly ramp up its operations. This not only helps ensure the foundation of the subsidiary is strong, it also saves time and money. In addition, the parent company can provide cash flow and investment, should the subsidiary suffer unexpected losses.
Establishing a foreign subsidiary also enables a parent company to expand its target consumer and to introduce its products and services to a new group of prospects. This not only generates revenue in the host country, but also it can have the tangential effect of helping the subsidiary access markets in neighboring countries.

Disadvantages

One of the major drawbacks of a foreign-owned subsidiary is that establishing this business can eat up the financial resources of a parent company. That’s why the parent company must conduct feasibility studies to determine not only what the costs are to get the subsidiary up and running but also what it will cost in the next five years to sustain that subsidiary, based on various economic factors.
By definition, a foreign-owned subsidiary is a company that didn’t develop organically from the country in which it operates. As a result, there are cultural and political challenges that may arise, which could negatively affect the success of that subsidiary. For example, in Saudi Arabia, women were not permitted to drive until June 2018, which could pose a significant challenge if a ride-sharing business were considering to have a subsidiary in that country.
Factors of Comparison Private Company Public One Person Company Limited Liability Partnership Partnership Sole Proprietorship
Capital Min: INR 1 & Max:No Limit Min: INR 1 & Max:No Limit Min: INR 1 & Max:2 Crore Min: INR 1 & Max:No Limit Min: INR 1 & Max:No Limit Min: INR 1 & Max:No Limit
Director Minimum 2 Minimum 3 Minimum 1 - - -
Shareholder Minimum 2 Minimum 7 Minimum 1 - - -
Designated Partner/Parter - - - Minimum 2 Minimum 2 -
Taxation 30%(25% if turnover does not exceed 250 Crore) 30%(25% if turnover does not exceed 250 Crore) 30% 30% 30% As per Slab Rates
Statutory Audit Compulsory Compulsory Compulsory If Contribution exceed INR 25 Lacs; If Turnover exceed INR 40 Lacs Not Required Not Required
Investor Preference High Low Low Medium Very Low Very Low
Compliance Cost Mdeium High Low Low Low Low
Regulator Registrar of Companies SEBI/Registrar of Companies Registrar of Companies Registrar of Companies Registrar of Firms -
Time take for Registration 5-7 working days 5-7 working days 5-7 working days 20-25 working days 10-12 working days 5-7 working days