Registering as an Indian Subsidiary Company : Things you should know

An Indian subsidiary company is what?

A company that is owned or under the control of another company is referred to as an Indian subsidiary. It is a type of corporate entity where a holding company holds the majority or a portion of the ownership. By taking into account elements like the subsidiary's preference share capital and paid-up equity share capital, one can ascertain the relationship between the holding company and the subsidiary.India has quickly become one of the world's most desirable business locations. In order to position itself as a business-friendly nation, the government has taken a number of steps, including opening up investment opportunities, encouraging foreign businesses to take part in local projects, and enacting business-friendly policies. India is now a desirable option for foreign businesses wishing to expand their operations as a result of these initiatives.

Factors to consider before establishing an Indian subsidiary company

1. Structure of the Law and Registration

It is essential to comprehend the different legal structure options before establishing a subsidiary in India. Private limited companies, public limited companies, and limited liability partnerships (LLP) are the three types of legal entities most frequently used in India for subsidiary companies. Every structure has its own specifications and rules. It is advised that you speak with legal professionals or other qualified consultants who can help you choose the best structure based on your business goals.

2. Regulations for Foreign Direct Investment (FDI)

Foreign businesses wishing to establish a subsidiary in India must adhere to Reserve Bank of India (RBI) and Foreign Exchange Management Act (FEMA) requirements. Foreign direct investment, shareholding patterns, industry-specific limitations, and compliance requirements are all governed by these legislation. To maintain compliance and prevent any legal complexities during the incorporation procedure, it is essential to understand the FDI requirements.

3. Capital Minimum Requirements

Depending on the chosen legal form, subsidiary firms in India are subject to minimum capital requirements. A private limited company, for instance, typically needs a minimum authorized and paid-up capital. The Companies Act of 2013's minimum capital requirements must be complied with, and the suitable capital structure must be chosen.

4. Corporate Responsibility and Compliance

The corporate governance and compliance requirements in India are strict and call for compliance with a number of legal requirements. You must adhere to the law as a subsidiary company, which includes keeping up-to-date books of accounts, submitting annual financial statements, holding board meetings, and satisfying all tax and regulatory requirements. Operating effectively within the Indian legal system requires establishing strong corporate governance standards and having a solid compliance framework in place.

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Ishita Ramani is an Operations Director and Co-Founder of Ebizfiling India Private Limited and has 13+ years of rich and profound experience with various corporate sectors. In her career so far, led teams of 50+ professionals.