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How to Register Subsidiary Company in India from USA
Indian government introduced various measures like such as PM Gati Shakti, single window clearance, GIS-mapped land Bank, reduced corporate tax rates, Make in India initiative to encourage foreign investment. With FDI and Business Setup in India growing rapidly in last two decades, many Company from USA started foreign subsidiary company registration In India.
Setting up and running Foreign company in India from USA requires compliance with various laws and regulations in India such as Companies Act 2013, Income tax Act 1962, FEMA 1999, SEBI Act, SCRA 1956, etc. It is crucial to keep ourselves updated and comply the legal formalities. This article mainly gives guidelines about setting up Wholly owned subsidiary of Foreign company in India from USA as Private Limited in India. Laws for foreign companies in India are simple.
Ways in which Foreign Companies can be Registered in India:
1.Wholly Owned Subsidiary:– For an Indian company to Become Wholly Owned Subsidiary Company of a Foreign Company, a foreign company needs to invest 100% FDI in that Indian company through automatic route, for the purpose of foreign company registration in India.
2.Joint Venture:- It is important for the foreign company to elect a local partner with whom it wants to enter into a joint venture. A Memorandum of Understanding or a Letter of Intent is to be signed which will state the basis for the joint venture agreement. A thorough discussion of all the terms should be done and they must be consistent with regional as well as international law.
3.Subsidiary Company:- In this Foreign company hold shares of Indian company upto the limit of 49.99% of the total shares of the company.
4.Registration by way of Branch office, Liaison office, Project office :- In this RBI and Government approvals are needed, which makes this route cost and time consuming.
Minimum Capital required to Register Company In India
There is no requirement of minimum capital to register a wholly owned subsidiary company in as private limited company. Best practice is for private limited company shall have Authorized share capital of minimum Rs.1,00,000 ( $ 1225 ) This authorized capital is usually cited in the Memorandum of Association of the company and it can be increased with the consent of the shareholders and by paying the required fee to the Registrar of Companies (RoC).
Requirement to Register Wholly-owned Subsidiary Company In India
To register Subsidiary Company in India from USA, it requires to have minimum 2 persons and address in India. For establishing subsidiary company, company shall have minimum 2 directors and at least one of them should be Indian citizen and resident.
Following more details are required for registering Subsidiary Company in India from USA:
- Proof of identity and residential address- Self-attested PAN and Aadhar
- Mail id and phone number
- Passport Size photo
- Director Identification Number (DIN) of all directors
- Digital Signature (DSC) of all directors
- Registered office address
List of documents to Register Company In India from USA
Following more details are required from Foreign Nationals acting as Directors :
- Foreign directors who serve as a Director in Company will have to submit a copy of their Passport along with address proof and Bank statement. Original documents must be notarized by notary in home country and by Indian embassy in country of Foreign director.
- In case of corporate becomes director, Board resolution authorizing investment in Indian company must be passed. Corporate entity is required to submit Board resolution along with Notice of resolution and Certificate of Incorporation of foreign company.
The advantage of foreign company registration in India from USA that it does not require presence of any foreign director in India. Registering Subsidiary Company in India from USA is complete online process and simple.
Fees for Register Company In India from USA
The Cost to register a Wholly owned subsidiary as Private Limited Company in India would vary from INR 15,000/- to INR 30,000/- depending upon the No. of Directors, No. of members, authorized share capital and Professional fees. Professional fees may depend upon the complexity of the task. All company registration will be free of cost up to an authorized capital of Rs. 10 lakh.
Advantages of setting up company in India from USA
- India is regarded as one of the leading economic player in world with immense human potential and large market. India has booming economy and wealth of resources.
- It is very cost effective for Foreign companies to set up business in India as Registration and set up cost is minimum.
- Indian laws allows 100% Foreign Direct Investment under FDI policy.
- India has competitive tax regime and comprehensive network of tax treaties.
- Political stability is vital for foreign investments. And India have stability of government which helps companies to carry business effectively without any obstacles.
FDI From USA to India
Foreign Investment in India is governed by the FDI policy announced by the Government of India and the provisions of the Foreign Exchange Management Act (FEMA) 1999. India’s FDI inflows have increased 20 times from 2000-01 to 2021-22. Karnataka, Maharashtra are the states which receive highest FDI in India. In FY 2021-22. Further, FDI is also allowed through two different routes namely, Automatic and the Government route. While over the years foreign investment has been liberalized considerably by the Indian government whereby 100 percent FDI in the majority of sectors has been made permissible, for a few sectors that are considered imperative from a national security perspective, the FEMA Regime prescribes thresholds beyond which investments by non-residents are not permitted, either under the automatic route or the government route.
Areas where FDI Investment is not allowed
The opportunities present in India have attracted a large amount of Foreign Direct Investment (FDI) into the country. But Government has specified some sectors where FDI investment is forbidden, this includes-
-Lottery Business
-Atomic energy
-Business of Chit fund
-Trading in Transferable Development Rights (TDR)
-Real estate business or construction of farm house
-Nidhi Company, etc.
Process of Register a Company in India from USA
Once company is ready with all required documents as given above, Register Subsidiary Company in India from USA . It will take around 8-10 business days provided all document are correct and company will have unique name. If any clarification issued it may take up to 15 working days.
Name approval stage is primary stage for any company incorporation. Shareholders can apply for Name reservation in SPICe Part A or they can apply for name reservation and company incorporation in consolidated SPICe form too. As per Rule 8 of Companies Rules 2014, if a foreign company is incorporating its wholly owned subsidiary in India , then original name of holding company as it may be allowed with the addition of word India or name of any Indian state or city. The name shall be considered undesirable if the proposed name implies association with an embassy or consulate of foreign government.If name satisfy all the conditions then ROC will approve the proposed name.
After name approval, Board Resolution and Power of Attorney in favour of authorized signatory, and Memorandum of Association (MoA) & Articles of Association (AoA) need to be drafted. Form DIR- 2 (document in which an individual declares his consent to be appointed as a Director of a company) & INC-9 (declaration that the subscribers and directors will have to submit to memorandum of company to show that they are non-convicted under any act and non-guilty of any offence) is to be submitted. On submission of this documents and paying requisite fees Certificate of Incorporation of Subsidiary Company in India from USA is issued by ROC.
Bank Account Opening In India for USA Company
Opening bank account in India for company USA subsidiary company is simple. Company can appoint Indian director for bank account opening process. Also can request banker to share banking id , password to USA director. After opening bank account company have to make report of FDI to RBI which ensure that business is in compliance and follows all regulations. You can open bank account online also, in such case it will take around 10-12 days and you will get account credentials to operate online bank account.
Income Tax Rate for Subsidiary Company in India from USA
Income Tax is chargeable on the net profits of the private limited company. The Income tax rate is 22% plus surcharge and cess of the profits. The tax is charged on the Indian entity and is not upon the shareholders of the company. Hence, the Parent Company will not be charged any tax on the profits earned by the subsidiary. An Annual Income Tax Return has to be filed by the Indian Subsidiary after payments of taxes.
What if Foreign Company stops doing business in India?
In case where Subsidiary Company in India from USA wants to windup its business at any time, provisions of Chapter XX (winding up) will apply mutatis mutandis as if it were company incorporated in India. Wholly owned subsidiary company will require to convey Board Meeting by giving at least 7 days prior notice and pass Board resolution. And file MGT-7 along with required documents. If company voluntarily wants to strike off its name then E-form STK-2 is to files and submitted. The whole process may take around 3-4 months to complete.
Conclusion
A N Bhutada & CO is chartered Accountant firm in India who can help you in Register Subsidiary Company in India from USA. We already assisted clients from USA , Japan , Europe etc. for company registration in India. We also help in post-registration compliance for foreign company in India.
