Diligence Certifications simplifies the registration process for Indian Subsidiary Companies, ensuring compliance with local regulations and legal requirements. Our expert team provides comprehensive guidance through each step, from documentation to application submission. With our assistance, you can establish your subsidiary efficiently, gain legal recognition, and leverage opportunities for growth in the Indian market.
A subsidiary company is controlled by another company, known as the Parent Company or Holding Company. The Holding Company owns a majority of the shares in the Subsidiary Company, allowing it to exercise control as the principal shareholder. When the Holding Company holds 100% of the subsidiary’s share capital, the subsidiary is termed a wholly-owned subsidiary. A subsidiary Company can be either established or acquired by the holding company.
Under Section 2 (87) of the Companies Act 2013, a “subsidiary company” or “subsidiary” in relation to any other company (the holding company) refers to a company in which the holding company:
(i) Controls the composition of the Board of Directors; or
(ii) Exercises or controls more than half of the total share capital
This control can be exercised directly or together with one or more subsidiary companies. Additionally, regulations may specify certain classes of holding companies that cannot have multiple layers of subsidiaries beyond a prescribed limit.
Explanation:
For this clause:
(a) A company is considered a subsidiary even if the control is exercised by another subsidiary of the holding company.
(b) The Board of Directors of a company is considered controlled by another company if that company can appoint or remove all or a majority of the directors at its discretion.
(c) The term “company” includes any corporate body.
(d) “Layer” refers to a subsidiary or subsidiaries of a holding company.
The following types of holdings fall under this definition:
An Indian Subsidiary Company is a company formed or registered in India but owned or controlled by a foreign company (the parent company). It allows the foreign entity to operate in the Indian market and keep a separate legal identity.
Subsidiary Company-Meaning/Definition under Legal Perspective
To understand a subsidiary company, we will go to Section 2(87) of the Companies Act, 2013. A company, according to this section, shall be a subsidiary of another company if:
A foreign business may find it strategically advantageous to create a subsidiary for its operations in India. Importantly, selecting a structure that satisfies your business’s goals and legal requirements requires a knowledge of the many kinds of subsidiaries. In India, subsidiaries are often divided into some groups based on their ownership, operational control, and operational scope. Let’s examine the Indian subsidiary corporations.
A wholly owned subsidiary is, as the name implies, fully owned and controlled by the parent company. This means that the parent company will hold 100% of the shares of the subsidiary. The upside of this configuration is maximum control, which enables the parent company to fully integrate the subsidiary into its global operations.
However, a wholly-owned subsidiary can only be established in sectors where 100% Foreign Direct Investment (FDI) is allowed. Fortunately, many sectors in India, such as mining and agriculture, allow up to 100% investment through the automatic route, which means that prior security clearance is not required from the Ministry of Home Affairs.
Partially owned subsidiaries differ from wholly owned subsidiaries in that the parent company holds a majority stake (usually more than 50%) but not 100% ownership. This means shared ownership and decision-making with other shareholders. The parent company usually assumes significant control but does not have the utmost authority.
This structure is often chosen when local partnerships help in market access, regulatory compliance, or tapping into local expertise.
Joint venture subsidies are subsidiaries made by two or more companies joining together, often a foreign parent company teaming with an Indian entity. These ventures are usually set up as separate legal entities.
Joint ventures provide the possibility for companies to pool resources, share risk, and draw upon each other’s advantages. They can be especially attractive for negotiating complex regulatory environments or accessing specialized market segments.
A liaison office is essentially a representative office set up for the furtherance of the business interests of the parent company in India. Its primary ability is to serve as a communication channel between the parent company and potential clients, suppliers, or partners. This is the most pertinent factor: a liaison office is not allowed to engage in any commercial activities in India. It can conduct market research, provide communications, and gather information; it cannot earn money.
A branch office is a company-established subsidiary that carries on similar business activities to that of its parent company. Unlike a liaison office, branch offices are allowed to conduct commercial activities, earn revenue, and function as an extension of that company itself in India. Like the wholly owned subsidiary, it is subject to similar legal obligations.
The operational activities of Indian subsidiaries are governed by a prevailing regulatory framework intended to provide transparency while protecting stakeholder interests.
Companies Act, 2013: The Act governs the relationship between holding and subsidiary companies and is based on the holding company’s voting power and authority over the subsidiary company’s board of directors. To prevent money from being redirected, it restricts the number of levels of subsidiaries, cross-holdings, and treasury shares. It also requires that the holding structure combine financial statements. To maintain control, the Act also gives the holding company the authority to choose which directors to add to and remove from the subsidiary’s board.
SEBI (Listing Obligation & Disclosure Requirements) Regulation, 2015: The regulation seeks to improve the corporate governance of subsidiaries, concentrating on material subsidiaries and related party transactions to ensure transparency and accountability.
Ministry of Corporate Affairs (MCA): The MCA administers the rules and regulations establishing the framework for Indian subsidiary company registration procedures while also ensuring compliance with the legal requirements.
Application in the Prescribed Form: The SPICe+ Form is used for registering subsidiary companies and includes:
Part A: Name Reservation (New Companies)
Part B:
Document Upload:
Company Related:
Directors and Shareholders Related:
Authentication and Payment: After uploading the documents, the applicant must download the form in PDF, authenticate it by affixing the DSC, and upload it with all required forms and declarations. Upon completing the payment, the Registrar of Companies (RoC) will review the submission and issue the Certificate of Incorporation.
Expanding your business to India through a subsidiary company involves navigating complex legal and regulatory frameworks. At Diligence Certifications, we simplify the process with our extensive experience, in-depth industry knowledge, and commitment to excellence.
Why Partner With Us?
Choose Diligence Certifications – Your Trusted Partner for Indian Subsidiary Company Registration!
An Indian subsidiary is a company incorporated in India where a foreign company owns more than 50% of shares. It operates under Indian laws but remains controlled by the parent foreign entity.
✔ 100% Foreign Direct Investment (FDI) allowed in most sectors.
✔ Limited liability protection for shareholders.
✔ Legal presence in the Indian market for business expansion.
✔ Lower tax rates compared to foreign branch offices.
✔ Access to Indian customers and supply chains.
✔ At least two directors (one must be an Indian resident).
✔ At least two shareholders (foreign parent company can be one).
✔ A registered office address in India.
✔ Compliance with Companies Act, 2013 and FEMA regulations.
📌 PAN & Aadhaar Card of Indian directors.
📌 Passport & Address Proof of foreign directors.
📌 Company Incorporation Certificate of the parent company.
📌 Memorandum & Articles of Association (MOA & AOA).
📌 Board Resolution for setting up an Indian subsidiary.
📌 Digital Signature Certificate (DSC) for directors.
1️⃣ Obtain Digital Signature Certificate (DSC) for directors.
2️⃣ Apply for Director Identification Number (DIN).
3️⃣ Reserve the Company Name through SPICe+ Form with MCA.
4️⃣ Draft MOA & AOA for company incorporation.
5️⃣ File incorporation documents with the Ministry of Corporate Affairs (MCA).
6️⃣ Receive Certificate of Incorporation along with PAN & TAN.
7️⃣ Open a corporate bank account and complete RBI & FEMA compliance.
The registration process usually takes 15 to 25 working days, depending on document verification and approvals.
📌 Corporate tax at 25% or 30% (depending on turnover).
📌 GST registration & filing (if applicable).
📌 Annual financial statements & audit compliance.
📌 FEMA & RBI compliance for foreign transactions.
Yes, in most sectors, 100% Foreign Direct Investment (FDI) is allowed without any prior approval. However, certain industries require government approval.
Feature | Indian Subsidiary | Branch Office |
Legal Identity | Separate entity from parent company | Same as parent company |
Liability Protection | Limited liability | Parent company is fully liable |
Tax Benefits | Indian corporate tax structure | Subject to higher tax rates |
Business Scope | Can engage in full-fledged business operations | Restricted to liaison, R&D, and exports |
✔ End-to-End Assistance – We handle everything from documentation to approvals.
✔ Expert Legal & Compliance Support – Ensuring full compliance with MCA, RBI, & FEMA.
✔ Quick Processing – Fast incorporation with minimal paperwork.
✔ Cost-Effective Services – Transparent pricing with no hidden charges.
✔ Ongoing Compliance Support – We assist with tax filings, GST, audits, and more.
The Diligence Certifications was created with the primary objective of providing compliance services in India and globally, by assisting in the implementation of business to ensure compliance requirements – all requirements in one place.
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