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COMPANY FOR FOREIGN SUBSIDIARY (WHOLLY OWNED)

A subsidiary is a Company with voting stock (that is more than 50%) controlled by another Company, usually referred to as the parent Company or the holding Company. In cases where a parent Company owns a foreign subsidiary, the subsidiary must follow the laws of the country where it is incorporated and operates. Hence, if a foreign subsidiary is incorporated in India, then it has to follow the applicable laws in India

 

Foreign Subsidiary can be formed in two ways as follows:

 

1.  Foreign Subsidiary: A Company who’s more than 50 % of shares is held and controlled by a foreign entity. Hence, if a foreign subsidiary is incorporated in India, then it has to follow the applicable laws in India.

 

2.  Wholly owned Subsidiary: A Company who’s all i.e. 100 % of shares is held and controlled by a foreign entity. It is also formed and run by laws applicable in India.

 

 

If foreign Entity wants to Incorporated or grow its business in India, they may register a private Company or a public Company depending upon the desirability and need of Foreign Entity. A private limited Company is a closely held Company and enjoins privileges given by the ComPANies Act, 2013 and easy to register. Generally, foreign comPANies incorporate a private limited Company in India.

 

Investment of FDI in a private Company has become easy as, except few sectors which are reserved, most of the sectors are opened for Foreign Investment.

 

Note:

• For NRI’s and Foreign National below mentioned documents must be apostilled by Consulate of Indian Embassy or attested by Foreign Public Notary depending upon whether the country is the member of Hague convention or not.

 

• For NRI’s and Foreign, National Please make note that if the person belongs to the country who is not the member of Hague convention then all the documents as mentioned above need to be apostilled by Consulate of Indian  Embassy. And if the person belongs to the country who is the member of Hague convention then all the documents as mentioned above can be provided after attestation by Foreign Public Notary.

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FAQ - Frequently asked questions

Do I need to be present in India during the process of setting up my business?

It is not necessary to be present in India for being appointed as a director or a shareholder. Similarly, the entire process of business registration can be done online and there is no requirement to travel to India or be present physically at any stage.


Can a Foreign Company or a Foreign Corporation hold shares of a Private Limited Company?

Yes, Foreign Companies can hold shares of a Private Limited Company in India subject to Foreign Direct Investment (FDI) Guidelines


Can a Foreign Parent Company incorporate a Subsidiary in India?

Yes, Foreign parent or holding Companies can incorporate a subsidiary as a 100% owned Private Limited Company in India subject to Foreign Direct Investment (FDI) Guidelines.


In which situations documents of foreign subscribers not required to be Apostilled?

As per Rule 13(5) if a foreign subscriber is present in India on Business Visa then documents are not required to be apostille.As per Rule 13(5) if a foreign subscriber is present in India on Business Visa then documents are not required to be apostille.