7 Important Points about Subsidiary Company Registration in India
Subsidiary Company Registration in India
Of late,
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.
For any feedback
or queries, please contact anil@ezybizindia.in or call @+919899217778 or visit website –
www.ezybizindia.in
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