Formation and Compliance of Subsidiary Company in India:

A foreign subsidiary company refers to an entity in which 50% or more of its equity shares are owned by a company incorporated in another foreign country, known as the holding or parent company. In India, for a company to be considered a foreign subsidiary, it must be incorporated in India, regardless of the location of its parent company.

Incorporation/Formation of a Foreign Subsidiary Company:

The first step in formation of a subsidiary company in India is to obtain the name availability. If the foreign parent company want to use the same company name in India or having trade mark registered of its key word in the company name and requires to form the subsidiary company in India with the same name, have to submit a duly attested copy of Board Resolution consenting the use of name of the parent company and the trade mark for incorporate a company in India.

On receipt of company name approval, the  foreign parent company has to subscribe to the Memorandum and Articles of Association of the company through its authorized person and sign and execute other documents and papers and get the same apostiled/attested from  appropriate authority. The Company has to produce a duly attested copy of Board Resolution authorizing some individual to subscribe on behalf of the company and specifying other details like the number of shares to be subscribed, the number of directors to be appointed, the identity of the individual Directors and the management of the new company.

Incorporation process will take a couple of days or let us a week’s time and the and requires the payment of incorporation fees based on the authorized/nominal capital of the company.

Compliance Requirements of Foreign Subsidiary company in India

Compliance requirements vary based on factors such as the company’s type, industry, annual turnover, and capital employed. Foreign companies, as defined in Section 2(42) of the Companies Act, 2013, must adhere to regulations from multiple legislations and authorities, including:Companies Act, 2013

• Income Tax Act, 1961
• GST Act, 2017
• SEBI rules and regulations
• FEMA (Foreign Exchange Management Act), 1999
• RBI compliances, etc.

In addition to the annual and event based compliances required to be done under the various acts mentioned above all the companies registered in India having foreign Direct Investment in India has to submit form FC-GPR/FC-TRS as the case may be and file foreign assets and liability statement with Reserve Bank of India in every year.

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