Foreign Subsidiary Company – meaning
A firm that has a foreign subsidiary is one in which another business that is registered abroad owns all or a portion of its stock. It has been incorporated in India if it has an Indian phone number for the foreign subsidiary company.
The major motivations for establishing a subsidiary company abroad are to grow the firm, benefit from local regulations, and boost profits. According to a report by the OFX group, 96% of US businesses feel comfortable doing business abroad.
Pros and cons of a Foreign Subsidiary Company
1. Pros
• Setting up a foreign subsidiary enables them to promote their goods and services in local markets.
• The company has access to resources in that nation, for instance, Japan has a strong technology infrastructure that draws in overseas investors.
• Aids in business expansion, a process that would not be feasible in the company’s native nation due to intense competition, and also sets up shop with local businesses.
Foreign subsidiary firms have substantially simpler registration requirements. includes tax advantages.
2. Cons
- Starting a subsidiary business may be more expensive. There may be political and economic difficulties they must overcome.
- It’s not appropriate for medium- or small-sized businesses. The result could be double taxation.
- The overseas subsidiary company’s incorporation in India.
- The overseas subsidiary company may be a wholly-owned subsidiary or a subsidiary that is owned in part (WOS).
- India fosters an environment that is profitable for foreign nations to develop. Foreign businesses must comprehend and abide by the established rules.
- The Company Act of 2013’s Section 7 and Rule 38 of the Company (Incorporation) Rules of 2014’s clarify the incorporation process and the SPICE+ form, respectively.
- Before beginning the registration process, the company is required to read all the points.
Documents Required For Registration of Foreign Subsidiary in India
- Name of the company
- Name of the directors
- Name of the nominee
- ID proof
- Address proof
- All the foreign documents must be translated to English and apostilled and notarized.
- DIN of the proposed director.
- Digital signature
- Resolution
- MOA and AOA (e- MOA and AOA is not allowed)
- NOC
- Copy of utility bill (eg bank statement not less than 2 months)
- PAN (if not apply for it)
- Designation. Now let’s know how a foreign subsidiary company is Registered.
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Registration of Foreign Subsidiary in India.
Go to the MCA website, log in or create a new account and then select SPICE+, which has 2 parts
Part 1:- Approval of name
The company has to provide details about
- Type of business
- Company class
- Business’s goals
- The company’s category, etc.
- The suggested name for the business
- If a business utilises a coined term or registered trademark, it must provide a NOC from the foreign business, a copy of the foreign business’ charter, and a copy of the registration document for the trademark, which must be suitably apostilled and notarized.
- If a business still goes by its previous name, it must be followed by “India.” Following that, 1000 should be paid, and you will obtain a certificate of approval in 20 days.
PART-2:- Incorporation
- The company is required to submit certain documents, including the name of the nominee, director’s name, ID proof, copy of the foreign company’s charter, and the name of the representative, all of which need to be notarized and apostilled.
- The company must physically prepare the MOA and AOA and submit them, along with DIR-2, a declaration from NOC, a copy of a utility bill (not older than two months), proof of address, and the requirement that any member’s digital signature be apostilled and notarized.
- It must include INC-9, a declaration provided by the director. EPFO, ESIC, GST (optional), and a bank account through AGILE PRO should all be covered.
- Save the information you’ve entered and any files you’ve added, then go ahead and pay. If all the conditions are met, you will be incorporated.