Overview of Indian Subsidiary Registration in India.
A sister company, also known as a subsidiary, is under the control of a parent company or holding company. The parent company possesses the authority to govern the subsidiary, whether partially or wholly. In India, the procedure for Indian Subsidiary Registration follows the guidelines of the Companies Act of 2013. As per this act, a subsidiary is characterized by a foreign corporate body or parent entity holding at least 50% of the total share capital. Essentially, the parent company wields substantial influence and control over the subsidiary.
Types of Subsidiaries in India
Wholly-Owned Subsidiary:
A wholly-owned subsidiary is a company whose entire share capital is held by another company, known as the parent company. In India, foreign companies often establish wholly-owned subsidiaries to have full control over operations, management, and decision-making processes within the country. This structure allows the parent company to maintain complete autonomy over its subsidiary’s activities while leveraging local resources and market opportunities.
Joint Venture Subsidiary:
Joint venture subsidiaries in India are formed when two or more entities, often from different countries, come together to undertake a specific business project or venture. Each partner contributes capital, technology, expertise, or other resources to the joint venture, and profits and risks are shared according to the terms of the agreement. Joint venture subsidiaries enable companies to combine strengths, share risks, and access new markets while leveraging local knowledge and resources.
Public Subsidiary:
Public subsidiaries in India are companies whose shares are publicly traded on stock exchanges. These subsidiaries are usually formed through public offerings, where shares are sold to individual and institutional investors. Public subsidiaries operate independently but are subject to regulatory requirements and transparency standards imposed by the Securities and Exchange Board of India (SEBI) and other regulatory bodies. Public subsidiaries have access to capital markets for fundraising and may benefit from increased visibility and liquidity of their shares.
Why is it necessary to choose the right business structure in India?
Starting a business as a sole proprietorship in India can be an exciting venture, but it’s crucial to ensure that your business is registered properly to comply with legal requirements and enjoy various benefits. Below is a comprehensive guide outlining the step-by-step procedure for registering a sole proprietorship in India.
- Determine Business Name:
The first step is to choose a unique name for your sole proprietorship. Ensure that the name is not infringing upon any existing trademarks and is not offensive or prohibited under Indian laws.
- Obtain PAN Card:
As an individual business owner, you’ll need to obtain a Permanent Account Number (PAN) card from the Income Tax Department of India. This serves as a unique identifier for tax purposes.
- Open a Bank Account:
Open a bank account in the name of your sole proprietorship. You’ll need to provide your PAN card, address proof, and identity proof to the bank for account opening.
Benefits of Indian Subsidiary Registration in India
- Access to a Diverse Market: Setting up a subsidiary in India provides access to one of the most diverse and rapidly growing markets in the world. With a population exceeding 1.3 billion people and a burgeoning middle class, India offers ample opportunities for companies to expand their customer base and increase revenue streams.
- Cost-Effective Workforce: India is known for its skilled, English-speaking workforce, which can be hired at competitive rates compared to many other countries. By establishing a subsidiary, companies can leverage this talent pool to enhance their operational efficiency and drive innovation.
- Favorable Regulatory Environment: The Indian government has introduced several reforms aimed at improving the ease of doing business in the country. Initiatives such as the introduction of the Goods and Services Tax (GST) and the simplification of labor laws have made it easier for foreign companies to navigate the regulatory landscape and conduct business in India.
- Strategic Location: India’s geographical location makes it an ideal hub for companies looking to expand their presence in the Asia-Pacific region. With its proximity to key markets such as China, Southeast Asia, and the Middle East, India serves as a strategic gateway for companies seeking to tap into these lucrative markets.
- Incentives and Subsidies: The Indian government offers various incentives and subsidies to encourage foreign investment in the country. These may include tax incentives, subsidies for setting up manufacturing units, and assistance with land acquisition. By establishing a subsidiary, companies can take advantage of these benefits to reduce their operational costs and improve their bottom line.
How Register Helps in the Indian Subsidiary Registration Process?
- Understanding Company Structures:
Private Limited Company: Requires a minimum of 2 and a maximum of 200 members. It restricts the right to transfer shares and prohibits any invitation to the public to subscribe for shares.
Public Limited Company: Requires a minimum of 7 members, with no upper limit on the number of shareholders. Shares can be freely traded on the stock exchange.
- Directorial Requirements:
Minimum Directors: Both Private and Public Limited Companies require a minimum of 2 directors.
Indian Resident Director: At least one director must be a resident of India, i.e., they must have stayed in India for a total period of not less than 182 days in the previous calendar year.
- Registered Office:
Physical Address: Every company must have a registered office within India, which serves as the official address for all communications.
Verification: Verification of the registered office address is mandatory and can be in the form of rent agreements, lease deeds, or ownership documents.
- Digital Signature Certificate (DSC):
Mandatory Requirement: All proposed directors must obtain a Digital Signature Certificate (DSC) to digitally sign the e-forms during the registration process.
Authentication: The DSC ensures the security and authenticity of documents filed electronically.
- Unique Name Approval:
Name Availability: Before registering a company, the proposed name must be checked for availability and conformity to naming guidelines set by the Ministry of Corporate Affairs (MCA).
Reservation Process: Name availability can be checked online through the MCA portal, and if the proposed name is unique and compliant, it can be reserved for 20 days.
- Memorandum of Association (MOA) and Articles of Association (AOA):
Constitution Documents: These documents define the constitution and rules governing the company’s operations and management.
Preparation and Submission: MOA and AOA must be prepared and submitted along with other incorporation documents during the registration process.
Documents Required for Sole Proprietorship Registration in India
Starting a business as a sole proprietorship in India requires adherence to specific legal procedures, including registration. This guide outlines the essential documents needed for sole proprietorship registration, ensuring a smooth and legally compliant process.
- Proof of Identity:
- Proof of Address:
- Business Registration Documents:
- Bank Documents:
- Affidavit and NOC:
- Photographs: