What is an Indian Subsidiary company registration?

A subsidiary company is controlled by another company known as the Parent or Holding Company, which owns a majority of its shares. When the holding company possesses 100% of the subsidiary's shares, it becomes a wholly-owned subsidiary, which can be established or acquired by the holding company.

According to Section 2 (87) of the Companies Act 2013, a subsidiary company, in relation to a holding company, is a company where the holding company:

• Controls the Board of Directors composition, or
• Has more than 50% of the total share capital, alone or with its subsidiary companies.

However, there are limitations on the number of subsidiary layers for certain prescribed holding companies.

Benefits of subsidiary company registration in India

There are numerous benefits of subsidiary company registration. Some of them are given below:

Separate Legal Identity: Law provides a distinct legal identity to Indian subsidiary companies.

Limited Liability: Shareholders or owners of the subsidiary company have limited liability towards the debts and obligations of the company.

FDI in India: 100% Foreign Direct Investment (FDI) is allowed for Indian subsidiaries with no prior approval.

Full Ownership: The parent company can have 100% shares of its Indian subsidiary registration.

Borrowing Capacity: An Indian subsidiary can borrow funds from various financial institutions in India.

Perpetual Succession: The existence of Indian subsidiary company remains forever irrespective of any change in the management, transfers of membership or condition of insolvency. This concept of perpetual succession provides continuity and stability to the Subsidiary companies that is most important benefit of Indian subsidiary registration.

What are the Types of Indian Subsidiary Company Registration?

The Types of Indian Subsidiary Registration are mentioned below:

Wholly Owned Subsidiaries: In a wholly-owned subsidiary, all the shares are held by its parent company. In such kind of company, parent company has exclusive and complete rights regarding management of the company.

Partly Owned Subsidiaries: Parent company doesn’t have complete control over this kind of Indian subsidiary registration. Generally parent company has up to 49 percent of shares in partly owned subsidiaries, but it has greater influence in the voting rights.

Joint Venture Subsidiaries: A joint venture subsidiary is formed when two companies having fifty percent of shares collaborate to form a single entity. In such business structure, both parent companies have equal control in the management of the joint venture.

Documents Needed For Indian Subsidiary Company Registration

Here is a list of the required documents for registration of subsidiary company in India.  

• MOA and AOA of the company
• Address Proof of the company
• Copy of Utility Bills
• Copy of resolution by the parent company
• Capital Layout of the proposed company
• Copy of incorporation certificate for foreign corporations
• Director Identification Number (DIN) and Digital Signature Certificate (DSC) of the directors are also needed for Indian Subsidiary Company Registration.
• Identity proof of Directors and Shareholders
• Address proof of Directors and Shareholders
• Passport size photographs of Directors and Shareholders
• Declaration by Directors and Shareholders
• All the information of the business interests of the directors in any other company

Complete Process Of Subsidiary Company Registration In India

Here's a step-by-step guide for subsidiary company registration in India.  

Decide the Type of Company

In the very first step, you have to decide the type of subsidiary company that you want to register in India.

Obtain Digital Signature Certificate (DSC)

In the online subsidiary company registration In India, you need to get a Digital Signature Certificate (DSC) for the proposed directors of the company. It is used to sign the essential documents during the online registration process.

Obtain a Director Identification Number (DIN)

It is required for The directors of the subsidiary company to obtain a Director Identification Number (DIN) from the Ministry of Corporate Affairs (MCA) by submitting the DIN application online for Indian subsidiary company registration.

Approval of Name

Select a unique name for your subsidiary company and apply for approval of name of the company on the website of the Ministry of Corporate Affairs (MCA). Keep in mind that the name of the company must be in accordance with the guidelines set by the MCA.

Memorandum of Association (MoA) and Articles of Association (AoA)

You need to draft MoA and AoA as per rules of the Companies Act 2013 for Indian subsidiary registration. These are legal documents that contain all the information about objectives, rules, and regulations of the company.

File Registration Document

After getting approval of name of the company, you will have to file the incorporation documents, like the MoA, AoA and other documents, with the Registrar of Companies (ROC) online. It is generally done by using the SPICe+ form.

Payment of Registration Fees for subsidiary company registration in India

You need to pay the registration fees to the ROC according to the authorized capital of the subsidiary company.

Get a Certificate of Incorporation

After going through all the documents submitted by you, the ROC will issue a Certificate of Incorporation, if he satisfies with your documents.

Obtain a Permanent Account Number (PAN)

After getting registered with the ROC, you will need to get a Permanent Account Number and a Tax Deduction and Collection Account Number from the Income Tax Department for the subsidiary company registration in India.

Open Bank Account

Finally,open a bank account in the name of the registered subsidiary company in India.

Obtain a GST Number

Goods and Services Tax (GST) registration is necessary after completing all the process of registration.

After getting all the documents mentioned above, a subsidiary company becomes eligible to run various business activities in India.