Introduction
A sister company, also referred to as a subsidiary, operates under the control of a parent or holding company, which holds the authority to oversee it, either partially or entirely. In New Delhi, the registration process for Indian subsidiaries adheres to the Companies Act of 2013. According to this legislation, a subsidiary is identified by a foreign corporate body or parent entity holding a minimum of 50% of the total share capital, indicating significant influence and control by the parent company.
What are the benefits of Indian Subsidiary Registration in New Delhi?
Indian Subsidiary Registration in New Delhi offers several compelling advantages:
Market Entry: New Delhi’s competitive business environment presents numerous investment prospects, attracting foreign entrepreneurs to establish subsidiary companies in the region.
Foreign Direct Investment (FDI): FDI involves foreign companies investing in Indian private enterprises through share subscriptions or acquisitions. In 2020, the Indian government mandated prior approval for investments from countries sharing a border with New Delhi, making the registration of Indian subsidiaries an attractive option for foreign investors.
Perpetual Succession: This concept ensures that a company’s existence remains unaffected by events such as management changes, membership transfers, or insolvency, providing stability and continuity.
Limited Liability: Limited liability encourages individuals to opt for company formation, extending to Indian subsidiary companies and safeguarding shareholders’ and directors’ personal assets. The company assumes responsibility for its debts to third parties, protecting stakeholders’ personal assets.
Diversification Opportunities: Establishing an Indian subsidiary provides foreign businesses with a strategic platform to expand operations, contributing to the Indian economy’s growth and fostering healthy competition by introducing various goods and services.
Separate Legal Identity: According to the Companies Act, a company is distinct from its shareholders and directors, empowering it to enter agreements with other entities, initiate legal actions, and respond to legal matters in its own name.
Property Ownership and Rental: As a legal entity, a subsidiary company has the authority to purchase or rent properties in New Delhi for its business activities. Acquiring properties in the company’s name aligns with perpetual succession principles and minimizes potential conflicts among company members.
Eligibility Criteria for Indian Subsidiary Registration in New Delhi
The eligibility criteria for Indian Subsidiary Registration in New Delhi typically include:
Foreign Ownership: The parent company must be a foreign entity intending to establish a subsidiary in India.
Minimum Capital Requirement: The subsidiary company must meet the minimum capital requirements as per the Companies Act of 2013.
Directors and Shareholders: The subsidiary company must have at least two directors, with at least one being an Indian resident. Shareholders can be individuals or entities.
Compliance with Regulations: The parent and subsidiary company must adhere to all applicable regulations and laws, including those related to foreign investment and company registration.
Name Approval: The proposed name of the subsidiary company must comply with the naming guidelines provided by the Ministry of Corporate Affairs (MCA) and receive approval.
Documentation: All required documents, such as incorporation certificate, memorandum of association, articles of association, and other relevant forms, must be prepared and submitted according to the registration process outlined by the MCA.
Registered Office: The subsidiary company must have a registered office address in New Delhi, which can be a residential or commercial property.
Compliance with Taxation Laws: The subsidiary company must comply with all taxation laws and obtain necessary tax registrations, such as Permanent Account Number (PAN) and Goods and Services Tax (GST) registration.
No Prohibited Activities: The subsidiary company must not engage in any activities prohibited by Indian law.
Clearances and Approvals: Depending on the nature of the business, the subsidiary company may require additional clearances or approvals from regulatory authorities.
Documents Required for Indian Subsidiary Registration in New Delhi
From all directors and shareholders:
Passport copies of foreign directors (authenticated by the Indian embassy).
Scanned copy of incorporation certificate issued by the respective foreign government (LLC/ INC) (authenticated by the Indian embassy).
Resolution from Limited Liability Company / INC for opening a subsidiary company in India. (Authenticated by the Indian embassy).
Scanned copy of Voter’s Identity Card/Passport/Driver’s License & Permanent Account Number of Indian director.
Passport-sized photographs of all directors and shareholders.
For Proposed Registered Office (Residential or commercial):
Any utility bills.
Scanned copy of rent agreement with a No Objection Certificate from the owner.
Online procedure for Indian Subsidiary Registration in New Delhi
Establishing an Indian subsidiary company entails a thorough series of steps and compliance measures. Below is an in-depth guide detailing the step-by-step process for Indian Subsidiary Registration in New Delhi:
Determine Company Type: Select the specific type of subsidiary company you plan to establish.
Obtain Digital Signature Certificate (DSC): As the registration process is online, acquire a Digital Signature Certificate (DSC) for the proposed directors, essential for electronically signing registration documents.
Apply for Director Identification Number (DIN): Directors must obtain a Director Identification Number (DIN) from the Ministry of Corporate Affairs (MCA) by submitting an online application.
Name Approval: Choose a unique name for the subsidiary company and seek approval through the MCA’s online portal, ensuring compliance with naming guidelines.
Draft Memorandum of Association (MoA) and Articles of Association (AoA): Prepare legal documents outlining company objectives, rules, and regulations, adhering to the Companies Act 2013 guidelines.
File Incorporation Documents: Upon name approval, file incorporation documents, including MoA, AoA, and necessary forms, with the Registrar of Companies (ROC) through the MCA’s online portal, typically using the SPICe+ form.
Payment of Registration Fees: Pay registration fees to the ROC based on the authorized capital of the subsidiary company.
Obtain Certificate of Incorporation (COI): If all documents are in order, the ROC issues a Certificate of Incorporation, confirming the subsidiary company’s registration.
Apply for Permanent Account Number (PAN) and Tax Registration: After obtaining the COI, apply for PAN and Tax Deduction and Collection Account Number from the Income Tax Department for the subsidiary company.
Open Bank Account: Conclude by opening a bank account in the subsidiary company’s name in New Delhi.
Compliance with Other Regulations: Ensure compliance with relevant regulations apart from company registration.
Obtain GST Number: Apply for Goods and Services Tax (GST) registration if engaged in various business activities.
Initiating Business Operations: Upon completing the steps, commence business operations, marking the culmination of the registration and initiation process for the Indian subsidiary company.
Conclusion
In conclusion, establishing an Indian subsidiary in New Delhi involves a comprehensive process that requires adherence to various eligibility criteria and regulatory requirements. From determining the type of company to obtaining necessary approvals and registrations, each step plays a crucial role in ensuring compliance and successful registration. By following the outlined procedures, including securing foreign ownership, meeting minimum capital requirements, appointing directors and shareholders, and obtaining necessary documentation, businesses can navigate the registration process effectively. Additionally, maintaining compliance with taxation laws, ensuring a registered office address, and obtaining required clearances contribute to the overall success of the subsidiary registration. Overall, thorough preparation and adherence to regulations are paramount for a seamless and legally compliant Indian subsidiary registration in New Delhi.
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