The government of India lets foreign nationals register and hold companies in India. Foreign nationals can do so by either investing in an existing Indian company by way of foreign direct investment or by going for new company registration in India with foreign shareholdings. Foreign shareholders can also register an Indian subsidiary company for their existing foreign company. Let us learn all about how to register a company in India with foreign shareholding.
Indian Subsidiary Company
A subsidiary company is a company whose actions and decisions are controlled by a different company. The controlling company is known as a parent company. In an Indian subsidiary company with foreign shareholding, more than 50% of shares are held by a foreign company.
Why you should register an Indian Subsidiary Company
Registering a foreign subsidiary company is extremely beneficial for foreign nationals who have an existing foreign company and want to expand their business operations in India.
Registering the Indian company as an Indian subsidiary company lets the foreign company own the Indian company. It lets all the business operations of the new Indian company be governed by the parent company, which is the foreign company.
Subsidiary companies generally get to keep the same name as their parent company.
Procedure for registration of Indian Subsidiary Companies by foreign nationals:
- Firstly you have to apply for name reservation for the Indian subsidiary company. While generally subsidiary companies can use the same name as their parent company, in certain instances, such as if the name is being used by an existing company or the name is not permitted by law, the subsidiary might have to choose a different name. You can apply for name reservation by filling Part A of the SPICe+ form provided by MCA.
- Next, you need to apply for DSC (Digital Signature Certificates) for the to-be directors of the subsidiary company. every Indian subsidiary company need a minimum of two directors. Hence, at least two directors need to apply for DSC. The DSC is extremely important as it needs to be affixed on the incorporation forms. For DSC for Foreigners, you have to submit all required documents apostilled and notarized.
- Finally, you have to submit the company registration form along with the necessary attachments. You can do this by filling Part B of the SPICe+ form.
- All Indian subsidiaries being registered by foreign nationals need:
- Attested Incorporation forms
- Notarised copies of their visa and passport (For foreign nationals that are within India)
- Notarized (by a public notary) and apostilled (by a competent authority of their country of residence) attachment documents.
New Private limited company in India with foreign shareholding
Registering a new private limited company registration is different from registering a subsidiary company. It is a completely new venture. Foreign nationals can register their companies as private limited companies or Public limited companies. The MCA (Ministry of Corporate Affairs) is the governing body for every company registered in India.
Why you should register a new private limited company
Incorporating a new company in India is the perfect choice for foreign nationals who want to start completely new business operations in India. Companies in India allow for 100% foreign direct investment in most sectors without the need for any government approval. Hence companies are the preferred business structure for a foreign national looking to start new business operations in India.
Procedure for registering a Private Limited Company with foreign shareholding
- Firstly, one has to reserve a name for the new company. Part A of the SPICe+ form provided by MCA lets you apply for name reservation.
- Secondly, you have to apply for a DSC (Digital Signature Certificate) for the to-be directors of the new company. You need a minimum of two directors for incorporation and both need to have a DSC. For DSC for Foreigners, you have to submit all the required documents apostilled and notarized.
- Finally, you have to fill out Part B of the SPICe+ form for incorporation of a new company and submit the same with all the required attachments.
- Apart from that, you also need to provide the following documents:
- For foreign nationals residing abroad:
- Notarised (notarised by a public notary) and apostilled (by a competent authority of their country of residence) copies of their passport
- Notarised (notarised by a public notary) and apostilled (by a competent authority of their country of residence) copies of address proof (Utility bill, driving licence etc).
- Foreign nationals residing in India have to submit the following documents. (The Consulate of the Foreign Embassy in India must attest all the documents).
- A copy of their resident permit
- Copy of their passport
- Copy of their Business visa
- A copy of their Bank statement/utility bill (not older than two months)
Some additional Pointers
- Every company incorporated by a foreign national, be it a new company or a subsidiary company requires two directors, of which at least one needs to be an Indian citizen who resides in India.
- Foreign nationals can be directors in new Indian companies as well as in Indian subsidiary companies. However, for that, they need to apply for a DIN (Director Identification Number) and DSC (Digital Signature Certificate).
- For incorporating a new or subsidiary company in India, you will need a registered office address in India. This address should be one that can accept correspondence and communications. You need to attach and submit proof of address along with the incorporation forms.
- Post incorporating a new or a subsidiary company in India with foreign shareholdings, the compliance would require reporting to RBI for the remittances received from foreign nationals within the stipulated date. You can find the steps for the entire reporting process in our next blog on Reporting of Foreign Remittance to RBI.