Subsidiary Company

What is Subsidiary Company Registration?

An Indian subsidiary company refers to a company that is controlled or held by another company. The relationship between two companies, as either holding or subsidiary, can be determined by looking at the preference share capital and the paid-up equity share capital of the subsidiary company. The subsidiary company can either be partially or completely owned by the parent company, which is also known as a holding company. However, it is important to note that a holding company and a parent company have slight differences. A wholly owned subsidiary is a company that is 100% owned by another company that has made a complete investment in it.

Features of Indian Subsidiary Company

  1. The Indian subsidiary companies are subject to the regulations of the Indian transfer pricing system.
  2. The Indian Subsidiary Company is treated on par with other Indian companies in terms of available funding mechanisms such as equity, debt, and internal accruals. The applicability of all laws, guidelines, and tax laws are also the same for the Indian Subsidiary.
  3. According to the Union budget 2020, the dividend distribution tax is currently nil.

Minimum Requirement for Indian Subsidiary

  1. The incorporation of a Company requires a minimum of two directors, out of which one must be a resident of India.
  2. No minimum capital is mandated for the formation of an Indian Subsidiary Company in India.
  3. The Indian Subsidiary Company must have a minimum of two shareholders, which can include individuals, entities, or a combination of both.
  4. The Parent Company must hold at least 50% of the total equity share capital.
  5. Director Identification Number is required for all directors.


Advantages of Indian Subsidiary registration

  1. Brand Name: The brand name benefits both the parent and subsidiary company.
  2. Control: The parent company gains strategic control over the subsidiary company, providing benefits.
  3. Shared Financial System: A common financial system helps to cut costs by sharing administrative and other expenses between the parent and subsidiary company, providing benefits.
  4. Limited Liability: Both the companies have limited liability.
  5. Global Strategy: Protection and security for the company’s trade secrets, expertise, and technical knowledge are provided along with control over operations, providing benefits.

ERA Legal Services Subsidiary Company Package

The Services which are included in our package are as Follows:
✅ Digital Signatures
✅ DIN of Directors
✅Filing of Spice form
✅Issue of Incorporation Certificate along with PAN and TAN
✅Memorandum of Association
✅Articles of Association
✅Provisional PF ESI Registration
✅GST Registration
✅MSME Registration

Subsidiary Company Procedure

Step -1 Arrange all Required Documents:
The first step is to arrange all the documents and send the same over the email / WhatsApp to us. Once all the Documents are Received, we will Start the Further Process.
Step -2 DSC and Name Availability:
The Next Step is to Start the Further Process of Digital Signature and Checking the Name availability.
Step-3 Preparation of Documents:
The Next Step is Preparation of Documents to be Submitted at Department.
Step-4 Filing of Spice Form:
The Next Step is Submission of Spice 32 Form at Department.

Documents Required for Subsidiary Company Incorporation

  1. Foreign directors must provide their passport.
  2. The incorporation certificate issued by the foreign government is required.
  3. A resolution from LLC/INC is needed to open a subsidiary company in India.
  4. Indian directors must provide a copy of their Voter’s ID/Driving license/Passport & PAN Card.
  5. Photographs of all directors and shareholders are mandatory.
  6. If applicable, a rent agreement must also be provided.

Annual Compliances of Indian Subsidiary Company

Indian Subsidiary companies must comply with various laws and regulations, including the Companies Act, Income Tax Act, FEMA guidelines, and transfer pricing guidelines. These companies are also required to file income tax returns with the income tax department, annual returns with the registrar of companies, and other mandatory filings with the Reserve Bank of India or the Securities and Exchange Board of India as per the applicable rules. The extent of compliance depends on factors such as the industry type, turnover, and number of employees.

FAQ on Subsidiary Company Registration

Q1. How to Set Up Indian Subsidiary Company?
In order to incorporate an Indian subsidiary, the legal entity must be registered with the Registrar of Companies (ROC), by completing a set of forms requested by the institution. This procedure has to be conducted once the ROC has accepted the company’s trading name.

Q2. Can Indian Company be a 100 % subsidiary of the Parent Company? Of course, the Indian Companies Act requires that there should be at least two shareholders and foreign companies hence must hold 99.99% of shares of an Indian subsidiary. Besides, minority balance holding is nominated and held under the Indian Companies Act in the name of an individual.

Q3. Are there any restriction on activities of Indian Subsidiary Company?
The reserve bank of India has some guidelines that define activities for foreign Companies under the following broad categories:
-A foreign company is freely allowed for the activities to engage in without obtaining any permission.
-A foreign company is allowed for the activities to participate subject to conditions.
-A foreign company is prohibited for the activities to engage in. Such activities are further elaborated under various circulars of RBI under FEMA.

Q4. Can a Company form OPC as its Subsidiary?
Only a natural person who is an Indian and resident in India is eligible to incorporate OPC as per the rule 3 of the Companies rules, 2014. Hence, the question of any “body corporate” or other organization form being the single member.