How to Incorporate a Subsidiary of a Foreign Company in India

What is a Subsidiary Company?

A subsidiary company is a legal entity established by a parent or holding company to expand operations under the same brand in a new location. Though it carries the parent company’s brand, a subsidiary functions as an independent legal entity. It can own assets, incur liabilities, acquire property, and is fully responsible for legal and tax compliance. A separate management team is required for governance and administration.

Subsidiaries can be categorized as:

• Wholly-owned subsidiary: The parent company owns 100% of the shares.
  
  

• Partially-owned subsidiary: The parent company holds a majority stake (more than 50%).
  
  

The parent company typically provides funding to support operations. Understanding the type of subsidiary and ownership structure is critical for planning and decision-making when starting a foreign subsidiary in India.

Minimum Requirements for Incorporation in India

A foreign company can establish an Indian subsidiary as either a Private Limited or Public Limited Company, each subject to Indian laws. The minimum requirements vary depending on the company type.

1. Number of Shareholders:

• Private Limited: Minimum 2 shareholders, maximum 200.
  
  

• Public Limited: Minimum 7 shareholders, no upper limit.
  
  

2. Ownership by Parent Company:

• Wholly-owned: Parent owns 100% of shares.
  
  

• Partially-owned: Parent owns more than 50% of shares.
  
  

• Less than 50% ownership does not qualify as a subsidiary.
  
  

3. Number of Directors:

• Private Limited: Minimum 2 directors, maximum 15.
  
  

• Public Limited: Minimum 3 directors, maximum 15.
  
  

4. Resident Director Requirement:
At least one director must be an Indian resident for over 120 days in the previous financial year. Other directors can be Indian or foreign nationals.

5. Registered Office in India:
A subsidiary must have a physical registered office in India. This address is crucial for legal communications and determines jurisdiction. Virtual offices or PO boxes are not permitted. Necessary approvals from authorities must be obtained before operations commence.

6. Capital Requirement:
Indian law does not mandate a minimum capital, but the parent company must invest sufficient funds to ensure smooth functioning. Investment can be in the form of equity or debt, based on the agreement between the parent and subsidiary. Capital should comply with Reserve Bank of India (RBI) regulations on foreign investments, and all documentation must be submitted for regulatory compliance. Capital funds can be used for operational expenses, infrastructure, technology, marketing, staffing, and other business needs.

Process of Incorporation of Foreign Subsidiary in India

Step 1: Gather Documents
Required documents typically include the Memorandum and Articles of Association, proof of registered office, director identification numbers (DINs), digital signature certificates, and a certificate of incorporation of the foreign parent company. The application is submitted online via the Ministry of Corporate Affairs (MCA) portal.

Step 2: Draft Board Resolution & Power of Attorney
A Board Resolution must be passed to approve the establishment of the subsidiary. Additionally, a Power of Attorney authorizes a representative in India to file the incorporation application.

Step 3: Legalize Board Resolution
Foreign documents must be legalized for Indian acceptance. This can be done via consulate attestation, apostille (for Hague Convention countries), or notary attestation (for Commonwealth countries).

Step 4: Name Selection & Approval
The subsidiary can adopt the parent company’s name with the addition of “India” (e.g., XYZ India Pvt Ltd). If using a registered trademark, a No Objection Certificate (NOC) from the parent company is required. Name approval is applied through the RUN form or Part A of the SPICe+ form.

Step 5: Legalize Incorporation Documents
Documents like the Memorandum and Articles of Association and DIR-2 consent forms must be drafted as per Indian law and legalized similar to the Board Resolution before submission.

Step 6: File Incorporation Application
Submit Part B of the SPICe+ form online with all required documents and the Digital Signature Certificate (DSC) of the authorized director. Pay the government fees and submit to the Registrar of Companies.

Step 7: Certificate of Incorporation & CIN
After verification, the Registrar issues the Certificate of Incorporation along with the Corporate Identification Number (CIN). Post-incorporation, the subsidiary must obtain PAN, GST, EPF registrations, open a bank account, and complete other formalities to commence operations.

Documents Required for Incorporation of Foreign Subsidiary in India

Incorporation of a Subsidiary of a Foreign Company in India

A. Information/Documents Required from the Foreign Company

1. Resolution of Foreign Company – Apostilled copy mentioning the authorized representative and number of shares subscribed.

2. Charter of Foreign Company – Apostilled copy of MOA, AOA, Certificate of Incorporation, or equivalent document as per country of origin.

3. ID Proof of Authorized Representative – Apostilled copy, if the representative is a non-resident of India.

4. Resident Director – Name of at least one director residing in India.

5. Nominee Director – Required in case of a Wholly Owned Subsidiary (WOS).

6. Proof of Subscribers’ Identity – If a director does not have DIN, attach proof of identity and residential address (apostilled/notarized in country of origin).

7. PAN Declaration – Declaration from foreign subscribers confirming non-availability of PAN (apostilled/notarized).

8. Registered Office Documents –

   • NOC from the property owner.

   • Proof of office address (Conveyance, Lease Deed, Rent Agreement, along with rent receipts).

Process for Incorporation

In India, incorporation of a subsidiary is done online via SPICe+ (Simplified Proforma for Incorporating Company Electronically). The process consists of two parts:

• Part A: Name Approval

• Part B: Incorporation of the Company

Note: Companies can either apply separately for name approval and then proceed with incorporation or submit both together in a single SPICe+ form.

STEP I: Name Approval (SPICe+ Part A)

Before applying for name approval, the foreign company must choose a suitable name under Rule 8A of the Companies (Incorporation) Rules, 2014.

Options for Name Selection:

1. Use a “coin word” from the parent company to leverage its foreign goodwill.

2. Use the same name as the foreign company by adding “India” (e.g., XYZ India Pvt Ltd).

3. Use a registered trademark (with NOC from the parent company).

4. Any other name as decided by the foreign company.

Required Documents for Name Application:

• Apostilled NOC from foreign company for use of coin word or trademark.

• Apostilled Charter of foreign company (translated into English).

• Copy of trademark registration documents (if applicable).

Procedure:

1. Login to MCA V3 Portal (www.mca.gov.in).

2. Fill SPICe+ Part A with:

   • Desired name(s) (two names can be proposed).

   • Class, category, and sub-category of company.

   • Main Division of Industrial Activity (code and description).

   • Necessary attachments (e.g., apostilled resolution).

3. Pay Rs. 1,000 as the application fee.

Important Points:

• Resubmission, if required, must be done within 15 days.

• Name reservation is valid for 20 days (can be extended up to 60 days with additional fees: Rs. 1,000 for first 20-day extension, Rs. 2,000 for next 20-day extension).

• No DIN or DSC is required for name application.

STEP II: Incorporation (SPICe+ Part B)

After name approval, the company must file SPICe+ Part B within 20 days (unless an extension is obtained).

Documents Preparation for Incorporation:

1. Digital Signatures: All Indian subscribers and directors must have DSCs.

2. Registered Office Proof: Lease/conveyance/rent deed along with utility bills (max 2 months old) and NOC from property owner.

3. Identity Proof of Directors/Subscribers:

   • Foreign: Apostilled Passport, Driving License, Bank Statement/Utility Bill.

   • Indian: PAN, Driving License/Voter ID/Passport, Bank Statement/Utility Bill.

4. Photographs: Two authorized persons for ESIC, EPFO, and bank documentation.

5. Board Resolution: Apostilled & notarized copy authorizing representative.

6. MOA & AOA Drafting – Apostilled & notarized if signed abroad.

7. PAN Declaration & INC-9 Form for foreign directors/subscribers.

Filling SPICe+ Part B

• Web-based form, all information saved on MCA dashboard.

• Mandatory to include: PAN & TAN, registered office address with latitude & longitude.

• MOA & AOA must be attached.

• Generate linked forms after completing online details.

Filling AGILE PRO Form

Post SPICe+ Part B, fill AGILE PRO (web-based) for:

• GST registration (if applicable)

• EPFO & ESIC registration (mandatory)

• Bank account opening (assigned as per registered office)

Requirements for AGILE PRO:

• Main business activity details

• Two authorized persons for ESIC, EPFO, and bank account operations

• Attach photographs of both authorized persons

• Mobile & email of authorized persons (OTP verification)

• Police jurisdiction and EPFO/ESIC office details

INC-9 Form

• Web-based, generated for Indian directors/subscribers and foreign directors/subscribers with DIN.

Filing & Certificate of Incorporation

1. Download PDF copies of SPICe+ Part B, AGILE PRO, and INC-9.

2. Digitally sign the forms.

3. Upload all linked forms on MCA portal and pay applicable fees.

4. Certificate of Incorporation issued in Form INC-11, containing PAN of the company (as per Rule 18).

Points to Remember While Filling SPICe+ Part B (Incorporation Form)

1. Directors Information
   
   

   • Maximum 20 directors can be mentioned in the incorporation form.
     
     

   • Maximum 3 directors can apply for DIN allotment through SPICe+.
     
     

   • If the company has more than 3 directors without DIN, incorporate with 3 directors initially and appoint the rest later.
     
     

2. Name Application
   
   

   • The desired company name can also be applied for within SPICe+ Part B.
     
     

3. Mandatory Registrations
   
   

   • PAN, TAN, EPFO, ESIC, and bank account details must be filled in for all fresh incorporations using SPICe+.
     
     

   • GST registration can also be applied for through the AGILE PRO form.
     
     

Features of SPICe+ (Single-Window Form)

Previously, company incorporation required multiple separate forms and steps. SPICe+ consolidates all into a streamlined process, including:

• DIN Application (up to 3 directors)
  
  

• Name Availability Application
  
  

• First Director Appointment (No DIR-12 required)
  
  

• Registered Office Address (No INC-22 required)
  
  

• PAN & TAN Application
  
  

• GST Registration
  
  

• EPFO, ESIC, Profession Tax Registration
  
  

• Bank Account Opening
  
  

This ensures a single-window, end-to-end incorporation process without the need for multiple separate applications.

Frequently Asked Points

1. Stamp Duty
   
   

   • Even for companies with authorized capital of Rs. 15 lakh or below, stamp duty is payable as it is a state matter. ROC fee exemptions do not cover stamp duty.
     
     

2. Number of DINs through SPICe+
   
   

   • Maximum of 3 DINs can be applied in the incorporation form. Additional directors without DIN can be appointed later.
     
     

3. PAN & TAN Filing
   
   

   • No separate form is required. PAN and TAN details are captured within SPICe+ and issued along with the Certificate of Incorporation.
     
     

Cautions to be Taken by Professionals While Certifying SPICe+ Part B

1. Obtain an Engagement Letter
   
   

   • Professionals must obtain a formal engagement letter from the subscriber before certifying the form.
     
     

   • This is important because the professional declares in SPICe+ Part B that they have been formally engaged for certification purposes.
     
     

2. Verify Original Records of Registered Office
   
   

   • Professionals must verify all particulars and attachments from the original records related to the registered office.
     
     

   • Certification requires that all information provided is accurate and based on authentic documents.
     
     

3. Ensure Attachments are Clear and Legible
   
   

   • All attachments submitted with SPICe+ Part B should be completely legible and properly scanned.
     
     

   • The professional certifies that the attachments are attached in their entirety and are readable.
     
     

4. Confirm Functioning of Registered Office
   
   

   • Professionals must personally visit the registered office to ensure it is functional and being used for the company’s business purposes.
     
     

   • This verification is a part of the professional’s declaration in SPICe+.
     
     

5. Obtain Declaration for Handover of Original Documents
   
   

   • After incorporation, the professional should obtain a declaration confirming that all original documents have been handed back to the company.
     
     

   • As per Section 7(4) of the Companies Act, 2013, copies of all filed documents and information must be preserved at the company’s registered office.
     
     

6. Compliance with MCA Circular 10/2014
   
   

   • MCA Circular 10/2014 emphasizes that omission of material facts or submission of false, incomplete, or misleading information may result in:
     
     

     • Referral to the e-Governance division of MCA
       
       

     • Initiation of proceedings under Section 447 of the Companies Act, 2013
       
       

     • Disciplinary action by the respective professional institute
       
       

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