7 Important Points about Subsidiary Company Registration in India
Added: (Thu Oct 13 2022)
Pressbox (Press Release) -
Subsidiary Company Registration in India
Oflate, India has become one of the most sought after business destinations of the world. Accordingly, every year, it is witnessing more and more foreign company registration in India.
There are many reasons for the same but predominantly, the presence of huge middle class consumer base, democratic government regime, second highest English speaking population and investor friendly schemes of the government are the major factors which has resulted in upsurge in setting up businesses in India.
Although there are many options available to a foreign company which wants to set up their business in India, however, one of the most popular and tax efficient entity structure for any foreign company is by way of subsidiary company registration in India.
In this write up, we have highlighted 7 important points relating to subsidiary company registration in India which would be beneficial to any foreign company which wants to set up business in India in the form of subsidiary company.
1) Firstly, subsidiary company registration in India can be in the form of Private Limited Company or public limited company.
2) Secondly, Subsidiary company can be either wholly owned subsidiary or partly owned subsidiary. When parent company holds almost entire share of the Indian company, Indian company becomes wholly owned subsidiary of the parent company. When parent company holds more than 50% of shares of the Indian company, Indian company becomes subsidiary of its parent company.
3) Thirdly, Minimum 2 shareholders and 2 Directors are required for subsidiary company registration in India out of which atleast 1 Director shall be an Indian Resident and Citizen. There may be any number of foreign Directors. Shareholders can be either individuals or companies, however, Directors has to be only individuals.
4) Fourthly, Out of all the forms of entity registration in India, subsidiary company is highly tax efficient since it is subject to 15% or 22% tax plus surcharge plus education cess, depending upon the business model of the company which is quite low as compared to LLP which is taxed at 30% plus surcharge and education cess and Branch office, which is charged at 40% plus surcharge plus education cess. Since, it is subjected to comparatively less tax rates; subsidiary company registration in India is the most preferred option of entity registration in India.
5) Subsidiary company can retain the brand name of its parent company. Also, it can use know-how, copyright, patent of its parent company.
6) The primary regulatory authority which provides approval for subsidiary company registration is Registrar of Companies or ROC in India. Further, in case, the nature of business of Indian subsidiary does not fall under automatic route, any investment in Indian subsidiary would require prior approval of RBI through AD Banker. Also, in case, the investment in an Indian subsidiary is routed through any landlocked country from India, in such cases, prior approval of FIFP is also required.
7) Unlike Branch office and Liaison office, which can undertake only those activities, which are permissible by RBI, there is no restriction on business activities of subsidiary company. They can undertake all the activities permissible as per their MOA except activities which are prohibited by RBI or activities which are not covered under automatic routes and which requires prior approval of RBI.
Above are the 7 important points relating to subsidiary company registration in India, which shall be kept in mind while deciding for business set up in India.
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