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.
