INCORPORATION OF SUBSIDIARY OF A FOREIGN COMPANY IN INDIA
Today is the era of Globalization and what could be a better market place, for the investors around the world, than India.
Moreover, Make in India Program launched by Honorable Prime Minister is inviting MNCs and other investors around the world to come and setup their business in India.
As a result, a number of foreign companies are setting up their subsidiary companies in India and that is the reason which made us to write this article on the “Incorporation of a Subsidiary of a Foreign Company in India”.
Incorporation of a Subsidiary Company in India: A Private Company
The Company incorporation process has been made less cumbersome with the introduction of new Form INC-29. Without getting into details of what a subsidiary is, or the benefits of incorporating a subsidiary, we mention below a few practical points which shall be helpful for incorporating a subsidiary of a foreign company.
Preliminaries: Matters to be considered
1. The new form INC 29 can be used only in a case wherein the proposed number of directors is up to 3.
2. At least one director should be having a DIN before filing the form.
3. The Companies Act, 2013 require at least 2 members in case of a private company and hence there should be at least 2 Subscribers to MOA, who shall subscribe for at least 1 share of the proposed company.
It means technically 100% shareholding can’t be taken by the foreign holding company and at least 1 share shall be subscribed by any other person, be it another subsidiary of that holding company, any director/promoter of holding company, or any other person.
4. If one of the subscribers to MOA is a foreign company, then the person, who is the authorized representative of that foreign company, can’t be the subscriber to MOA in his individual capacity. In short, a person can be a subscriber to MOA, either in individual capacity or in representative capacity.
5. All the documents of the proposed directors shall be notarized by the Notary (Public) of the country of his origin and, in certain cases, if the Director is a foreign national, the documents may require Apostilling as well.
It means that in case of a Non-Resident Indian (Indian National), only notarization is required. Such an NRI can give his Indian residence or foreign residence Proof, both of which will require notarization only.
6. MOA and AOA shall also require Apostilling in case any of the subscribers is a foreign national, which will always be the case because the proposed company is being incorporated as a subsidiary of the foreign company and hence foreign company will be its subscriber.
7. It may be noted that a notarized document is a copy of the document which is certified to be a true copy of the original and signed (notarized) by the one who is a registered Notary Public. This notary public is usually an attorney, a lawyer or a justice of the peace. An apostle to a document is the authentication, by a specially appointed government official, of a copy of a public document which has been notarized as a true copy by a notary public. Hence, Apostillised documents are required in case of foreign national.
8. Atleast one Director should be a resident of India. A subsidiary of foreign company cannot have all foreign Directors.
Standard Attachments of INC-29 (Integrated Incorporation Form) at a Glance
1. DIR-2 (Consent to act as a Director): For all the directors
2. DIR-8 (Directors are not disqualified): For all the directors
3. INC-9 (Affidavit by directors of No offence): For all the directors and subscribers
4. INC 10 (Specimen Signature of the subscribers): Subscribers only (If Company is a subscriber, Authorized representative will sign INC-10)
5. Interest of Directors in other entities.
6. Affidavit of Non Acceptance of Deposits: For all the Directors
7. INC-8 (Certificate by a Practicing CA or CS)
8. NOC from the owner of the premise, wherein the proposed company shall be having its registered office.
9. Proof of identity and address proof of all the directors for whom DINs are not available and, which is being sought for by way of INC-29 (Integrated Incorporation Form) itself.
10. Proof of Identity and address of Subscribers.
11. Certificate of Incorporation of Foreign Company.
12. Board Resolution passed in BM of Foreign Company, regarding investment in Indian Subsidiary and No Objection regarding the Name of Indian Company in being similar to foreign company’s name, if this being the case.
13. AOA & MOA
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