Overview

A Foreign Subsidiary Company is an Indian company in which a foreign body corporate holds more than 50% of the total share capital. This structure permits foreign investors to establish a legal presence in India while maintaining management and ownership control.

The registration process is governed by the Companies Act, 2013, FEMA (Non-Debt Instruments) Rules, 2019 and the FDI Policy issued by DPIIT.

Eligibility Criteria

1. Foreign Shareholding – More than 50% of the share capital must be held by a foreign company or individual.
2. Directors – Minimum two directors, one of whom must be a resident in India, i.e., has stayed in India for at least 182 days during the previous calendar year (as per Section 149(3) of the Companies Act, 2013).
3. Shareholders – Minimum two shareholders; the foreign parent can be one of them.
4. Registered Office – Must have a registered office address in India.
5. Sector Eligibility – The business sector must allow 100% FDI under the automatic route or else prior Government approval is required.

Documents Required

For the Foreign Company / Parent Entity:

• Certificate of Incorporation
• Memorandum & Articles of Association (charter documents)
• Board Resolution authorizing investment in the Indian entity
• Address proof of the registered office abroad
• Copy of Passport / ID proof of authorized signatory

For the Indian Subsidiary:

• PAN of Indian directors
• Identity and address proof of directors and shareholders
• Registered office address proof in India (utility bill + NOC from owner)
• Digital Signature Certificate (DSC) for all directors/subscribers

Registration Process

1. Obtain Digital Signature Certificate (DSC)

Digital signatures are obtained for proposed directors/subscribers and are used throughout the SPICe+ (INC-32) online incorporation process on the MCA portal.

2. Apply for Name Reservation (Part A of SPICe+)

Submit proposed company names through the RUN/Part A of SPICe+ on the MCA portal.

3. Prepare and File Incorporation Forms (Part B of SPICe+)

File SPICe+ forms along with e-MOA (INC-33) and e-AOA (INC-34). The forms are digitally signed and uploaded on the MCA portal.

4. PAN & TAN Allotment

Automatically generated through SPICe+.

5. Certificate of Incorporation (COI)

Once approved, the ROC issues the COI containing the Corporate Identification Number (CIN).

Post-Incorporation RBI & FEMA Compliance

• Opening Bank Account: Getting an account opened in the name of the subsidiary.
• FDI Reporting: File Form FC-GPR on the RBI’s FIRMS portal within 30 days from the date of share allotment, as per FEMA (Non-Debt Instruments) Rules, 2019.
• Downstream Investment Compliance: If the Indian subsidiary invests in another Indian company, it must comply with downstream investment norms applicable to Foreign-Owned or Controlled Companies (FOCC) under FEMA.

Regulatory and Tax Compliance

1. Income Tax: Taxed as a domestic company under the Income Tax Act, 1961, generally at 22% or 25% (plus surcharge and cess) depending on eligibility under Section 115BAA/115BAB or turnover.
2. Annual Filings: File Form AOC-4 and Form MGT-7A annually with the MCA.
3. Audit & Accounting: Books of accounts must be maintained and audited annually as per the Companies Act, 2013.
4. Repatriation of Profits: Dividends or royalties can be repatriated abroad in compliance with FEMA, RBI Master Direction on Remittance of Assets and the Liberalised Remittance Scheme (LRS).

Fees

• Government Fee- Varies based on authorized capital (including government charges, stamp duty.)
• Professional Fee- It may vary depending on the scope of work, complexity of the structure and the service provider engaged.

Timeline

The complete registration process usually takes around 15–20 working days, depending on document verification and approvals from the Registrar of Companies (ROC).

FAQs