8 Sources of Finance for Small-Scale Industries

 Introduction 

 

Many foreign corporations and enterprises are indicating a strong interest in establishing operations in India since it is one of the fastest-growing economies in the world. Foreign nationals(excluding Bangladeshi or Pakistani citizenship)and corporations established outside of India are eligible to invest and establish subsidiaries in India. They can do this by purchasing shares that are subject to Indian FDI (Foreign Indirect Investment) regulations. However, there is a minimum need for at least 2 directors of which one should be an Indian director and the other should be a foreign director to establish an Indian Subsidiary Company. In this blog, we will discuss all about an Indian Subsidiary company registration.

 

 Subsidiary Company 

A foreign entity/business or parent corporation that holds at least 50% of the entire share capital is considered to be an Indian subsidiary Company. The parent company will be the one that has full or partial control over the subsidiary company.

 

 The benefits and requirements of registering an Indian subsidiary in India 

 

The advantages listed below encourage for the establishment of an Indian Subsidiary company in India:

 

 

• As the Government of India has permitted 100% FDI engagement in the fastest developing industries, which helps them in attracting foreign corporations to invest in India.

 

• All members and directors are only liable for the amount of their shareholding in the Indian Subsidiary company. As a result, neither member nor director is personally liable for any financial loss or hardship in the company.

 

• The company's existence is unaffected by any modifications brought on by any death, departure, bankruptcy, or transfer, etc.

 

• An Indian subsidiary company is entitled to receive the same privileges as a regular Private Limited Company.

 

Before registering a subsidiary company in India, the following should be taken into account:

 

• The company must be incorporated with a minimum of two directors, at least one of them should be an Indian resident.

 

• Nowadays, there is no requirement for minimum capital to establish an Indian subsidiary company.

 

• There must be a minimum of two shareholders, who can be either people, companies, or both.

 

• The foreign or parent company must own at least 50% of the total share capital.

 

• For all directors, a director identification number is required.

 

 Process to set-up an Indian Subsidiary Company in India 

 

An Indian subsidiary company registration procedure is identical to that of registering a Private Limited Company in India. The procedure to register an Indian subsidiary company is described below:

 

1. The parent company should collect all the necessary documents. All the directors and signatory authorities should apply for DSC as they have to duly sign the documents required in the process of online company registration in India.

 

2. The members should decide a unique name for the Subsidiary Company. It should be noted that a minimum of 2 names should be proposed at the time of establishment. After deciding to apply for the name approval via SPICe+ Form. It should be filed with MCA.

 

4. After name approval of the Subsidiary Company, the members should prepare and draft AOA and MOA for the Indian Subsidiary Company.

 

5. Application for subsidiary registration in the prescribed form i.e. SPICe+ Form:

 

• Part B: In Part B of the Form Spice+, apply for the following services:

1. Incorporation

2. DIN allotment

3. Mandatory issue of PAN

4. Mandatory issue of TAN

5. Mandatory issue of EPFO registration

6. Mandatory issue of ESIC registration

7. Mandatory issue of Profession Tax registration(Maharashtra)

8. Mandatory Opening of Bank Account for the Company and

9. Allotment of GSTIN (if so applied for)

 

6. Following the approval of incorporation of the Indian Subsidiary Company, the company has to open a bank account in the name of the company and it should open in India.

 

 List of the documents required while incorporating an Indian Subsidiary Company 

 

The members and directors of both India and foreign must submit the all necessary documents required for Indian Subsidiary Company registration. Apart from the members, there are other important documents required for company registration in India. The paperwork is divided into the following categories:

 

A. Required documents from Indian Resident

 

• Copy of PAN card

• Address Proof like Bank Statement (not older than 2 months)

• Identify proof like a Driving License, Voter ID, or Aadhar Card

 

B. Required documents from the foreign national

 

• Copy of Passport

• Copy of Address Proof(it must be certified by the Indian Consulate)

• A Copy of Identity Proof(it must be certified by the Indian Consulate)

 

C. Other required documents

 

• Certificate of Digital Signatures for all the Directors and Members

• DIN of all the Directors

• Articles of Association and Memorandum of Association of the company

• Telephone bill, electricity bill, and water bill for last 2 months as the office address proof for registered office in India

• A resolution from a foreign company or parent company declaring the establishment of its Indian subsidiary and appointing the authorized representative.