India Business Setup
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Incorporation of company as Indian subsidiary of foreign company including Accounting, Financial statement preparation, MCA annual return filing and Income tax return filing.
Incorporation
- Company Registration
- Share Certificates
- Current Account Opening
- GST Registration
- 2 Digital Signatures
- 1 RUN Name Approval
Incorporation + Tax Assist
- 1 RUN Name Approval
- 2 Digital Signatures
- Company Registration
- Current Account Opening
- GST Registration
- MCA Annual Return Filing
- DIN E-KYC for 2 Directors
- GST Return Filings
- Income Tax Filing
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Monitor and protect your brand from infringement
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Proprietorship Registration
Welcome to Bmcsindia, your trusted partner for a smooth and hassle-free business setup in India. Expanding your business through the registration of a subsidiary company in India is a strategic move that offers numerous advantages. India's vast market potential, a growing middle-class segment, an improved regulatory climate, access to a diverse talent pool, government incentives, and more, make it an appealing destination for business growth. However, realizing these benefits also comes with its share of challenges. Navigating the Indian business landscape requires a deep understanding of local regulations and the continuously evolving business environment. This is where Bmcsindia steps in, leveraging our expertise to simplify this complex process. At Bmcsindia, we are dedicated to helping you establish your presence in India seamlessly. Our team of legal and business experts is committed to making the subsidiary setup a hassle-free process, allowing you to concentrate on expanding your business.
Subsidiary Company
A subsidiary company is often referred to as a sister company, while the company that exercises control over it is known as the parent company or holding company. The parent company holds the authority to control the subsidiary company, either in part or entirely. The registration process for an Indian subsidiary company is governed by the Companies Act of 2013. According to the Companies Act of 2013, a subsidiary company can be defined as a company in which a foreign corporate body or parent entity holds a minimum of 50% of the total share capital. In essence, the parent company exerts a significant influence and control over the subsidiary company.
Types of Subsidiaries in India
In India, there are two primary categories of subsidiaries:
Wholly-Owned Subsidiary
In a wholly-owned subsidiary, the parent company holds 100% ownership of the subsidiary's shares. However, it's essential to recognize that wholly-owned subsidiaries can only be established in sectors that permit 100% Foreign Direct Investment (FDI).
Subsidiary Company
In this category of subsidiary, the parent company owns 50% of the subsidiary's shares. Before proceeding with the establishment of a subsidiary in India, obtaining approval from the Reserve Bank of India is a crucial prerequisite. This regulatory step ensures compliance with the country's foreign investment regulations and safeguards the interests of all stakeholders involved.
Advantages of Indian Subsidiary Company
There are several compelling advantages associated with registering a subsidiary company in India:
Entry into the Indian Market
India's competitive environment offers a plethora of investment opportunities that attract foreign entrepreneurs to establish their subsidiary companies in the country.
Foreign Direct Investment (FDI) in India
Foreign Direct Investment (FDI) entails investments made by foreign companies in Indian private companies through share subscriptions or acquisitions. In 2020, the Indian government introduced a provision mandating prior approval for investments from countries sharing a border with India. This development has rendered Indian subsidiary registration an appealing option for foreign investors.
Perpetual Succession
The concept of perpetual succession ensures that a company's existence remains unaffected by events such as changes in management, transfers of membership, or insolvency. The company persists in its operations, ensuring stability and continuity.
Limited Liability
Limited liability is a substantial advantage that incentivizes individuals to choose company formation over other business structures. This principle also extends to Indian subsidiary companies, safeguarding the personal assets of shareholders and directors. The company assumes responsibility for its debts to third parties, providing protection for the personal assets of its stakeholders.
Scope of Diversification
Establishing an Indian subsidiary company offers a strategic pathway for foreign businesses to expand their operations, thereby contributing to the growth and development of the Indian economy. It also introduces a diverse array of goods and services, promoting healthy competition.
Separate Legal Identity
According to the Companies Act, a company is regarded as a distinct legal entity, separate from its shareholders and directors. This legal status grants the company the authority to enter into agreements with other competent entities as an artificial legal person. It also enables the company to institute legal proceedings and address allegations within the judicial system using its own name, without direct involvement from its members or directors.
Property Ownership and Rental
A subsidiary company, being a legal entity, holds the authority and the right to acquire or lease properties in India for its business operations. To avoid potential conflicts among company members, it is advisable to procure such properties in the name of the company itself, in line with the principle of perpetual succession.
Regulatory Authorities for Indian Subsidiary Company Registration
The Ministry of Corporate Affairs (MCA) is responsible for establishing and enforcing the rules and regulations governing company registration and compliance. Registrar of Companies (ROC) offices oversee the processes related to company incorporation, ensuring that companies adhere to legal requirements. The Reserve Bank of India (RBI) regulates foreign currency exchange aspects for Indian subsidiary companies, ensuring compliance with financial regulations.
Requirements and Key Facts about Company Registration in India
The process of registering a company in India is governed by the Companies Act, 2013, which outlines various pre-incorporation and post-incorporation requirements. Here are the essential elements to consider when registering a company in India:
- Company Name: Your new business requires a unique name that is distinct from existing businesses' names or trademarks
- Shareholders: The parent company can hold 100% of the shares, or any combination of two foreign nationals can be shareholders. It is not mandatory to have an Indian resident as a shareholder.
- Share Capital: India does not impose a minimum capital requirement for company registration.
- Directors: A minimum of two directors is mandatory, with at least one director being an Indian resident. Nominee directorship services can be provided if required.
- Registered Address: Every company in India must have a registered address that is officially recorded in government records. Virtual office address services are available to meet this requirement.
- Annual General Meeting (AGM): According to the Companies Act, every Indian company must conduct at least one general meeting annually, in addition to two board meetings.
- Company Secretary: It is mandatory to file three secretarial returns each year, which are handled by a company secretary. Bmcsindia can assist with this requirement. A statutory auditor must also be appointed.
Taxation
- Professional fees, including government fees for company registration
- Following incorporation, companies are subject to a profit tax rate of approximately 25.36%.
- GST (Goods and Services Tax) is applicable to domestic sales, with monthly GST returns and one annual tax return required.
Annual Compliance
India has unique compliance requirements, including mandatory statutory audits even for smaller companies.
- Companies must appoint a statutory auditor and submit annual filings.
- Navigating these requirements is crucial for establishing and operating a company in India under the Companies Act, 2013.
Procedure for Indian Subsidiary Company Registration
Setting up an Indian subsidiary company involves several key steps and compliance requirements: Here's a step-by-step guide on how to register a company's subsidiary in India:
Determine the Type of Company
Decide on the type of subsidiary company you want to establish.
Obtain Digital Signature Certificate (DSC)
As the registration process is conducted online, it is essential to acquire a Digital Signature Certificate (DSC) for the prospective directors of the company. The DSC is utilized for electronically signing the required documents throughout the registration process.
Apply for Director Identification Number (DIN)
The directors of the subsidiary company are required to obtain a Director Identification Number (DIN) from the Ministry of Corporate Affairs (MCA). This can be achieved by submitting the DIN application online.
Name Approval
Kindly select a distinctive name for your subsidiary company and proceed to apply for its approval through the MCA's online portal. Ensure that the chosen name complies with the naming guidelines provided by the MCA.
Draft Memorandum of Association (MoA) and Articles of Association (AoA)
The Memorandum of Association (MoA) and Articles of Association (AoA) are legal documents that specify the company's objectives, rules, and regulations. It is essential to draft these documents in compliance with the provisions of the Companies Act 2013.
File Incorporation Documents
After your selected name is approved, you should proceed to file the incorporation documents, which encompass the Memorandum of Association (MoA), Articles of Association (AoA), and other essential forms, with the Registrar of Companies (ROC) through the MCA's online portal. The incorporation process is typically carried out using the SPICe+ form on the Ministry of Corporate Affairs portal.
Payment of Registration Fees
Pay the necessary registration fees to the ROC based on the authorized capital of the subsidiary company.
Obtain a Certificate of Incorporation (COI)
If all the submitted documents and information are found to be in order, the ROC will issue a Certificate of Incorporation. This certificate serves as the official confirmation of the subsidiary company's registration.
Apply for Permanent Account Number (PAN) and Tax Registration
Once you have obtained the Certificate of Incorporation (CoI), proceed to apply for a Permanent Account Number (PAN) and a Tax Deduction and Collection Account Number (TAN) from the Income Tax Department for the subsidiary company.
Open Bank Account
Finally, open a bank account in the name of the subsidiary company in India. Compliance with Other Regulations: In addition to the company registration process, ensure compliance with other relevant regulations.
Obtain a GST Number
Goods and Services Tax (GST) registration is necessary after completing the above steps, particularly if the company is involved in various business activities. Every Indian company must apply for a GST number for taxation purposes.
Initiating Business Operations:
The company can commence its business operations once all the preceding steps are completed.
Compliance Requirements for Indian Subsidiary Registration
To establish a legal and valid Indian subsidiary company, compliance with specific regulations is mandatory:
- Foreign Exchange Management Act (FEMA):Foreign companies based in India must adhere to foreign exchange laws and regulations outlined in the Foreign Exchange Management Act, 1999.
- Companies Act, 2013: All Indian subsidiary companies must comply with the Companies Act, 2013 provisions.
- Reserve Bank of India (RBI) Compliances: RBI imposes several foreign exchange management compliances on Indian subsidiary companies.
- Income Tax Act, 1961: Indian subsidiaries must file income tax returns every year. The corporate tax rate in India is currently 25%.
- Annual Returns: Companies are required to file annual returns with the MCA and the Registrar of Companies.
- SEBI (Listing Obligations and Disclosure Regulations): If the subsidiary lists its securities on a stock exchange, it must comply with SEBI regulations.
Taxation of Indian Subsidiary Companies
Indian subsidiary companies are subject to specific taxation policies:
- Taxes are levied on all income earned within or outside India, including dividends from foreign subsidiaries.
- Tax rates for foreign subsidiaries in India include 50% for royalty received for technical services from the government or any Indian entity and 40% for other income.
- A surcharge of 2% is applied if the company's income falls between Rs. 1 Crore and Rs. 10 Crores; for payments above Rs. 10 Crores, a 5% surcharge is levied.
- A 4% health and education cess is added to the total tax amount.
Concessional tax rates apply to Indian subsidiaries in specific sectors, such as oil exploration, air transportation, and shipping businesses.
FDI in Private Limited Company
100% Foreign Direct Investment is allowed in most sectors. A few sectors, however, require prior approval from the Central Government for foreign investments. These sectors include private security agencies, civil aviation, mining, print media and broadcasting, satellite establishment and operation, pharmaceuticals, and trading of food products.
Foreign entities can establish wholly-owned Indian subsidiaries with 100% ownership, subject to specific qualifications.
For a Private Limited Company
- No minimum capital requirement
- Minimum of 2 directors (at least one must be a resident of India)
- Minimum of 2 shareholders
For a Private Limited Company
- Minimum of 3 directors
- At least seven shareholders
How bmcsindia Can Assist with Indian Subsidiary Company Registration
Bmcsindia simplifies the establishment of an Indian subsidiary company by providing comprehensive support at every critical juncture. Our services range from selecting a unique name and obtaining essential Director Identification Numbers (DIN) and Digital Signature Certificates (DSC) to assisting with PAN and TAN applications and establishing a dedicated company bank account. We streamline the entire registration process.
Our expert team ensures compliance with regulatory requirements, including the Foreign Exchange Management Act (FEMA), Companies Act, 2013, Reserve Bank of India (RBI) compliances, and the Income Tax Act, 1961.
We facilitate the filing of annual returns, guide you through SEBI (Listing Obligations and Disclosure Regulations) compliance, and provide tax services to navigate India's taxation policies. With Bmcsindia as your partner, you can confidently and efficiently initiate and grow your Indian subsidiary business.
Proprietorship vs Limited Liability Partnership (LLP) vs Company
| Features | Proprietorship | Partnership | LLP | Company |
|---|---|---|---|---|
| Definition | Unregistered type of business entity managed by one single person | A formal agreement between two or more parties to manage and operate a business | A Limited Liability Partnership is a hybrid combination having features similar to a partnership firm and liabilities similar to a company. | Registered type of entity with limited liability to the owners and shareholders |
| Ownership | Sole Ownership | Min 2 Partners Max 50 Partners | Min 2 Shareholders Max 15 Directors Max 200 Shareholders 1 Director 1 Nominee Director | |
| Registration Time | 7-9 working days | |||
| Promoter Liability | Unlimited Liability | Limited Liability | ||
| Documentation | LLP Deed Incorporation Certificate | |||
| Governance | – | Under Partnership Act | LLP Act, 2008 | Under Companies Act,2013 |
| Transferability | Non Transferable | Transferable if registered under ROF | Transferable | |
| Compliance Requirements | Income tax filing if turnover is more than Rs.2.5 lakhs | |||
Frequently Asked Questions
BMCS India offers comprehensive business consultancy services, including strategy development, market research and analysis, financial advisory, operational optimization, and organizational transformation. We provide customized solutions to help businesses address challenges and achieve their growth objectives.
BMCS is the top most business management consultant all around the world. Our team of experienced consultants leverages industry knowledge, market insights, and proven methodologies to provide tailored solutions that align with your business goals. Whether you need assistance with market entry, strategic planning, process optimization, or talent management, we collaborate closely with you to understand your unique needs
BMCS India has expertise across various industries, including but not limited to technology, healthcare, manufacturing, retail, finance, and hospitality. Our consultants have worked with diverse clients, enabling us to understand industry-specific challenges and devise strategies that meet your sector's requirements.
To engage our services, you can reach out to us through our contact form, email, or phone. Our team will schedule an initial consultation to discuss your business objectives, challenges, and requirements. Following this consultation, we will provide a tailored proposal outlining the scope of work, deliverables, timeline, and pricing for your approval.
Absolutely! We work with businesses of all sizes, ranging from startups and small enterprises to multinational corporations. Our services are flexible and customizable to meet your specific needs, ensuring that you receive the level of support required to achieve your business objectives, irrespective of your company's size.
At BMCS India, we understand the importance of client confidentiality. We adhere to strict data protection protocols and maintain the highest level of confidentiality. Our consultants sign non-disclosure agreements, and we have robust internal systems in place to safeguard client information. Rest assured, your sensitive data is handled with the utmost care and confidentiality.
Yes, we can help your business expand internationally. Our team has experience and expertise in supporting companies with market entry strategies, feasibility studies, partner identification, and localization strategies in various global markets. We leverage our network of international partners to provide you with valuable insights and guidance throughout the expansion process.
To get started with BMCS India, simply reach out to us through our contact information on our website. We will be glad to schedule an initial consultation to understand your business requirements and discuss how our services can benefit you. From there, we will work together to develop a tailored plan to drive your business success.