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Practical Aspects of Incorporation of Foreign Subsidiary Company In India

The incorporation of a foreign subsidiary company in India is a complicated process. It involves a lot of practical aspects that have to be accounted for. Learn in-depth about the same right now.

A foreign subsidiary company is any firm, where half or more of its capital shares are possessed by a company that is registered in a foreign nation. The said foreign firm in such a situation is called holding a company or the parent corporation. Lets check the steps to Incorporation of Foreign Subsidiary Company In India

The Indian Companies Act, 2013 permits the incorporation of a subsidiary company of a foreign company in India. The subsidiary company focuses on regulating the composition of the board of directors or controlling more than half of the total share capital. For a company to be a foreign subsidiary company in India, it must be present in India. It does not matter which country the parent company is incorporated in.

Compliances are established on many characteristics of the firm. One must know what all compliances are presumed to be met according to the category of company that is integrated, the management systems, annual income, and the number of workers. A foreign company is distinguished under Section 2(42) of the Companies Act, 2013.

Indian Law on the Application of a Foreign Name in an Indian Company

  • Rule 8 of the Company Rule, 2014 notes that if a foreign company integrates its subsidiary company in India, then the actual name of the owning company as it is maybe enabled along with the word ‘India’ or the name of any Indian State or city.

Note: In case the foreign incorporating subsidiary company has a name that is similar to that of an Indian company then it should apply mutatis mutandis as per rule 8.

  • The name will not be accepted if it represents a federation or association with an embassy or consulate of a foreign government
  • The proposed name comprises the name of any new country or any city in a foreign country, the same shall be authorised if the applicant provides any proof of the importance of business connections with such foreign region like a memorandum of realisation with a company of such country.
  • The name that encompasses the name of a foreign country with India, take for instance India Japan or Japan India shall be authorised if there is a government to government participation. Apart from this, no business shall be integrated using the name of an opponent country.

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Information Required for the Process

Initially, all the documents signed outside the Indian region for petition of name or incorporation shall be notarised according to the country. 

At the Time of Application of the Name

  • Incorporation/registration certificate: The document of incorporation or enrollment certificate should be provided to the authorities. It should be in English or should be translated into the English language
  • Trademark certificate: The document of certificate of the registered trademark
  • NOC: No-objection certificate (NOC) from the foreign company to use a ‘particular word or ‘trademark’ in the aspect of resolution.

After the Approval of the Name, the Following Information Will Be Required

  • Resolution: The copy of the resolution passed by the foreign company is mandatory and has to be presented to the authorities on request
  • Id proof: The document of ID proof of government-approved representatives. Please note that such ID proof should be duly notarised in a trial if such a deputy is a non-resident. Any person be it a non-resident or resident of India can become an authorised administrator
  • MOA: Document of the charter of a foreign company
  • Resident director: Details of at least one resident Indian director should be provided
  • Nominee: The name of the nominee of the shares is crucial. Please note that the name and signature of the nominee will be expected, the company is getting on to be integrated as a fully owned subsidiary. As per the Indian Companies Act, a minimum of two investors are needed.

Documents Required for the Process

  • Memorandum Of Association(MoA) and Article of Association (AoA): The MOA and AOA of the company. In the case of foreign subsidiaries, eMOA and eAOA are not approved by the Ministry of Corporate Affairs (MCA) due to their attestation and being signed outside the country
  • PAN Declaration: Declaration from the foreign applicants in admiration of not having an Indian PAN number
  • Form DIR-2: Form DIR-2 for permission to act as manager, to be signed by each manager Report that the DIR-2 approved by the Indian director needs to be provided if it is signed in India
  • KYC: ID and Address proof of the administrator’s DIN. Please note that the director’s identification number (DIN) doesn’t require you to combine their KYC. The MCA demands passport/ voter ID/ driving license as ID proof and they approve Bank Statement or electric bill address proof for individuals that don’t possess DIN
  • Form INC-9: Form INC-9 for a declaration by the initial subscriber and managers
  • Digital Signature: Digital signature of only one applicant is sufficient for the incorporation of such businesses
  • Non-Objection Certificate (NOC): NOC from the proprietor of the assets in case the property is taken on lease for the practice of the registered department of the company
  • Address Proof: Proof of headquarters address like rent agreement or lease agreement along with a document of utility bill like water bill, electricity bill, telephone bill which should not be older than 2 months.

How Vakilsearch Can Help in Integrating Foreign Subsidiary Company?

As you can see, the rules and regulations that a foreign subsidy company should comply with are pretty long. Experts at Vakilsearch can easily help you to comply with the regulations of the Indian Companies Act and enjoy all the relevant benefits and protection. Reach out to our experts at Vakilsearch and they can easily help you out with the process.

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