Subsidiary Company Registration & FEMA Advisory in India

Subsidiary Company in India – End-to-End Incorporation, FEMA & Tax Advisory Since 1961

What is an Indian Subsidiary Company & How is Equity Structured?

• 100% Wholly Owned Subsidiary (WOS) in India: The foreign parent corporation owns 100% of the equity share capital. Because Indian company law requires a minimum of two shareholders for a Private Limited Company (and One Person Companies can only be formed by natural Indian citizens), a 100% WOS is legally structured with the Foreign Parent Company holding 99.99% of shares (e.g., 9,999 shares) and a Nominee Shareholder holding 0.01% (e.g., 1 share) strictly in trust for the parent. Immediately post-incorporation, our team files Forms MGT-4, MGT-5, and MGT-6 with the Registrar of Companies (ROC) so that 100% beneficial interest and dividend rights are legally vested in the foreign parent.
• Joint Venture (JV) / Majority-Owned Subsidiary (51% to 99% Equity): The foreign parent company holds more than 50% of the equity share capital alongside an Indian co-founder, strategic partner, or domestic distributor. We draft customized Shareholders’ Agreements (SHA) and entrenchment clauses in the Articles of Association (AOA) to protect the foreign parent’s affirmative voting rights, board seat majority, and exit options.

Entity Comparison: Subsidiary vs. Branch, Liaison & Project Office

2026 FDI Policy Routes & Sectoral Eligibility in India

• 100% Automatic Route (No Prior RBI or Government Approval Needed): Foreign parent companies can invest up to 100% equity directly and report the investment post-facto within 30 days of share allotment in sectors including Information Technology (IT), SaaS & Software Development, Global Capability Centres (GCCs) & BPO/KPO, Manufacturing (including contract manufacturing), Management & Engineering Consultancy, B2B Wholesale Cash & Carry Trading, E-Commerce Marketplace Model, Export-Oriented Inventory E-Commerce (liberalized under Press Note 3 of 2026 for goods manufactured in India), Medical Devices, Renewable Energy, and Insurance Companies/Intermediaries (100% Automatic Route).
• Government Approval Route (FIFP / NSWS Portal): Prior approval through the National Single Window System (NSWS) is required only for a narrow list of regulated sectors above prescribed caps (such as Defence above 74%, Print Media, Broadcast Content, Multi-Brand Retail Trading at 51%, or Telecom/SatCom under specific conditions).
• Land-Bordering Country (LBC) Advisory (Press Note 3 of 2020 & Press Note 2 of 2026): Where an investing entity is incorporated in a country sharing a land border with India (China, Bangladesh, Pakistan, Nepal, Myanmar, Bhutan, or Afghanistan), or where citizens/entities of an LBC hold more than 10% beneficial ownership or exercise control over the investing entity (as recalibrated under the 2026 NDI Rules amendments), prior Government of India security clearance is mandatory. Our FEMA partners conduct pre-filing cap-table due diligence for global PE/VC-backed companies to verify Automatic Route eligibility.

Mandatory Statutory Requirements to Register a Subsidiary in India

• Minimum 2 Directors (Including 1 Indian Resident Director): A Private Limited Subsidiary requires at least two natural persons as directors (a Public Limited Subsidiary requires three). Under Section 149(3) of the Companies Act, 2013, at least one director must be an Indian Resident—defined as an individual who has physically stayed in India for at least 182 days during the financial year. All other directors can be foreign nationals residing abroad. (If your group does not yet have a senior local executive in India, KBCCA advises on compliant Resident Director arrangements and corporate governance safeguards.)
• Minimum 2 Shareholders: Minimum two subscribers to the Memorandum of Association (up to 200 shareholders permitted in a Private Limited Company). Both shareholders can be foreign corporate bodies or foreign individuals.
• Pragmatic Authorized & Paid-Up Capital Structure: While the Companies Act imposes zero statutory minimum paid-up capital, MCA government incorporation fees are waived for authorized capital up to INR 15,00,000 (only nominal state stamp duty applies). We help you calibrate initial share capital vs. External Commercial Borrowing (ECB) or advance invoicing so your subsidiary is adequately funded from day one without overpaying stamp duty.
• Registered Office in India with Geo-Tagged Compliance: Every subsidiary must maintain a verifiable Registered Office from the date of incorporation (or within 30 days via Form INC-22). Under current MCA V3 rules, the office must display a permanent company name board with geo-tagged and timestamped exterior/interior photographs. During your setup and transition phase, KBCCA assists foreign companies with compliant Registered & Representative Office support in New Delhi.

Our 8-Stage Subsidiary Incorporation & RBI Compliance Workflow

• Stage 1: Pre-Incorporation Structuring & Drafting of Charter Documents (Days 1–3): Our partners hold a kick-off call with your overseas legal/finance team to finalize the equity split, NIC business activity code, object clause, and capital structure. We draft the Parent Company Board Resolution, Trademark/Name NOC, physical Memorandum & Articles of Association (MOA/AOA), Form DIR-2, and Form INC-9 for execution in your home country.
• Stage 2: Notarization & Hague Apostille / Embassy Legalization (Client Home Country): While you get the parent company documents notarized and Apostilled (if your country is a signatory to the Hague Apostille Convention, such as the USA, UK, EU, Singapore, Japan, Australia, or UAE/Canada as applicable) or legalized at the Indian Embassy, we simultaneously prepare the Indian Resident Director and Registered Office filings in New Delhi.
• Stage 3: MCA V3 Business User Registration & Class-3 DSC Issuance (Days 4–6): We create verified Business User profiles on the MCA V3 portal (`mca.gov.in`) and arrange Class-3 Digital Signature Certificates (DSC) with encrypted USB tokens and remote video verification for both foreign and Indian directors.
• Stage 4: Name Reservation via SPICe+ Part A (Days 6–8): We file SPICe+ Part A with the Central Registration Centre (CRC), attaching the apostilled Parent Board Resolution and NOC so your subsidiary is approved to use your global corporate brand name (e.g., "[Parent Name] India Private Limited").
• Stage 5: Filing SPICe+ Part B (INC-32) & AGILE-PRO-S (INC-35) (Days 9–14): Once the name is reserved (valid for 20 days), we compile and certify the master SPICe+ Part B webform along with AGILE-PRO-S. Upon approval by the Registrar of Companies (ROC), you receive a single integrated package:
  • Certificate of Incorporation (COI) & 21-digit Corporate Identity Number (CIN)
  • Director Identification Numbers (DIN) for up to 3 new directors
  • Permanent Account Number (PAN) & Tax Deduction Account Number (TAN) from the Income Tax Department
  • Employees' Provident Fund (EPFO) & Employee State Insurance (ESIC) employer codes
  • Optional immediate GSTIN Registration & Bank Account intimation
• Stage 6: First Board Meeting, Statutory Auditor & AD Category-I Bank Account Opening (Weeks 3–4): Within 30 days of incorporation, we convene the First Board Meeting (Section 173), appoint the First Statutory Auditor (Form ADT-1), open statutory registers, and coordinate with top Indian or international Authorized Dealer (AD) Category-I Banks (such as HDFC, ICICI, Citi, HSBC, DBS, or SBI) to activate your corporate current account.
• Stage 7: SWIFT FDI Capital Infusion, Share Valuation & RBI Form FC-GPR Filing (Weeks 4–6): We provide exact SWIFT remittance instructions to your parent company's treasury so the share subscription money arrives under RBI Purpose Code S0001 (Foreign Direct Investment equity). Once funds hit the Indian bank account:
  • We obtain the electronic Foreign Inward Remittance Certificate (e-FIRC) and Know Your Customer (KYC) Report (Form Annex-II) from the AD Bank.
  • The Board allots shares within 60 days of receipt of funds and issues stamped Share Certificates (Form SH-1).
  • We issue the mandatory FEMA Valuation Certificate and Compliance Certificate, register the Entity Master and Business User on the RBI FIRMS Portal (`firms.rbi.org.in`), and file the Single Master Form (SMF – Form FC-GPR) within 30 days of share allotment.
• Stage 8: Filing Form INC-20A (Commencement of Business) with ROC: Within 180 days of incorporation, we file Form INC-20A attaching the Indian bank statement showing full receipt of subscription money from the foreign parent and nominee shareholder. Only after Form INC-20A is approved can the subsidiary legally sign commercial contracts or borrow funds.

Complete Document Checklist for Foreign Subsidiary Setup

To ensure zero resubmission queries from the Central Registration Centre (CRC) or your AD Bank, our team provides ready-to-sign templates and verifies the following documents:

• 1. Documents Required from the Foreign Parent Company (Notarized & Apostilled / Consularized):
  • Certificate of Incorporation / Registration or equivalent Trade Register extract of the Foreign Parent Company.
  • Charter Documents (Memorandum & Articles of Association / Bylaws / Operating Agreement) of the parent company (translated into English by a certified translator if in another language).
  • Board Resolution of the Foreign Parent Company approving the establishment of the Indian Subsidiary, specifying the number and value of equity shares to be subscribed, and naming the authorized representative who will sign the MOA/AOA on behalf of the parent.
  • No Objection Certificate (NOC) from the parent company authorizing the use of its corporate name/trademark in India.
  • Proof of Registered Address of the foreign parent company and Ultimate Beneficial Owner (UBO) chart for bank KYC and Form BEN-2 assessment.
• 2. Documents Required from Foreign Directors & Authorized Representative (Notarized & Apostilled):
  • Clear colour copy of valid Passport (mandatory identity proof for foreign nationals).
  • Individual Address Proof (Driving License, Residence Card, Bank Statement, or Electricity/Water/Phone Utility Bill—must display the full residential address matching the form and must not be older than 60 days).
  • Recent passport-size colour photographs, personal email ID, mobile number, and signed Consent to Act as Director (Form DIR-2).
• 3. Documents Required from the Indian Resident Director & Indian Registered Office:
  • Indian Resident Director: Self-attested PAN Card (mandatory), Identity Proof (Passport / Voter ID / Driving License), Address Proof (Bank Statement or Utility Bill not older than 60 days), and DIN (if already held).
  • Registered Office in Delhi NCR / India: Rent or Lease Agreement, Utility Bill (Electricity/Water/Gas Bill not older than 60 days showing exact premises address), and a signed No Objection Certificate (NOC) from the property owner.

Corporate Taxation, Repatriation & Transfer Pricing for Indian Subsidiaries

• Concessional 22% Corporate Tax Rate (Section 115BAA): By filing Form 10-IC on or before the due date of the first Income Tax Return (ITR-6), your Indian Subsidiary locks in a flat 22% base corporate income tax rate (an effective tax rate of 25.17% including 10% surcharge and 4% cess), regardless of turnover, with complete exemption from Minimum Alternate Tax (MAT under Section 115JB).
• Seamless Dividend & Profit Repatriation with DTAA Relief: Post-tax profits can be repatriated as dividends to the foreign parent company without prior RBI approval. While India imposes a standard 20% withholding tax (plus surcharge/cess) on dividends paid to non-residents, our international tax partners apply India's Double Taxation Avoidance Agreements (DTAA)—reducing dividend withholding tax to 5%, 10%, or 15% (for parent companies in jurisdictions such as Singapore, Mauritius, Netherlands, UAE, UK, USA, Germany, Japan, etc.) supported by a valid Tax Residency Certificate (TRC), electronic Form 10F, and CA-certified Form 15CA / Form 15CB.
• Transfer Pricing & Safe Harbour Advisory (Section 92 to 92F): Every transaction between the Indian Subsidiary and its foreign parent or sister companies (captive IT/software development, R&D, engineering support, management cross-charges, royalty, or inter-company loans) is an "International Transaction" between Associated Enterprises (AEs). We draft inter-company Master Service Agreements (MSAs) on a compliant Cost-Plus markup basis, prepare the three-tier Transfer Pricing Study Report, advise on CBDT Safe Harbour elections (Form 3CEFA), and issue the mandatory Chartered Accountant Audit Report in Form 3CEB before 31st October.

Critical Compliance Rule: Why Foreign Subsidiaries Cannot Claim "Small Company" Exemptions

Why Global Corporations Trust K.B. Chandna & Co. (Est. 1961) as Their India Partner

• Over 65 Years of Institutional Heritage & RBI Empanelment: Established in 1961, K.B. Chandna & Co. is empanelled with the Reserve Bank of India (RBI), the Comptroller & Auditor General of India (C&AG), and leading public sector banks. Overseas Boards and General Counsel rely on our six-decade track record of ethical, audit-ready execution.
• Direct Partner Involvement on Every Foreign Mandate: Your subsidiary setup is never handed off to an anonymous call centre. Senior partners—led by Mr. Onil Chandna (F.C.A.) and Mr. Sanjeev Chandna (F.C.A.)—personally review your MOA/AOA, FEMA share valuation, AD Bank correspondence, and Transfer Pricing agreements.
• Complete Post-Incorporation Back-Office Under One Roof: Once your subsidiary is incorporated, you do not need to coordinate with separate vendors for bookkeeping, payroll, GST, audit, and secretarial filings. Through our dedicated BPO & KPO Accounting Division, we run your entire Indian finance, payroll, TDS, GST compliance, and monthly MIS reporting in your preferred ERP (SAP, NetSuite, QuickBooks, Xero, Zoho Books, or Tally Prime).
• Headquartered in New Delhi with Pan-India Associate Network: From our principal office in South Extension II, New Delhi, and through our associate offices across Mumbai, Bengaluru, Chennai, Hyderabad, Pune, and Kolkata, we support foreign subsidiaries setting up in any Indian state or Special Economic Zone (SEZ / STPI).

Contact K.B. Chandna & Co. – Schedule Your India Entry Consultation

Frequently Asked Questions (FAQs)

• 1. Can a foreign company hold 100% equity in an Indian Subsidiary Company?
  Yes. Under India's consolidated Foreign Direct Investment (FDI) Policy and FEMA (Non-Debt Instruments) Rules, 100% foreign equity ownership is permitted under the Automatic Route in the vast majority of sectors—including IT, SaaS, Global Capability Centres (GCCs), manufacturing, management consultancy, B2B wholesale trading, insurance, and export-oriented inventory e-commerce—without requiring prior approval from the Reserve Bank of India (RBI) or the Government of India.
• 2. Why does a 100% Wholly Owned Subsidiary in India still need two shareholders?
  Under Section 3(1)(b) of the Companies Act, 2013, a Private Limited Company in India must have a minimum of two shareholders. To establish a 100% Wholly Owned Subsidiary (WOS), the foreign parent corporation subscribes to 99.99% of the equity shares directly, while a nominee shareholder (either an individual director or a group entity) holds 1 share (0.01%) on behalf of the parent company. After incorporation, the nominee and parent file Forms MGT-4, MGT-5, and MGT-6 with the ROC to legally record that 100% beneficial ownership belongs to the foreign parent.
• 3. Who qualifies as a mandatory Indian Resident Director under Section 149(3)?
  Every Indian company must have at least one director on its Board who has stayed in India for a total period of not less than 182 days during the financial year (proportionately adjusted for newly incorporated companies). The Resident Director does not have to be an equity shareholder—they can be an Indian citizen, an Overseas Citizen of India (OCI), or a foreign national holding a valid Employment Visa who satisfies the 182-day physical stay requirement.
• 4. Do foreign directors or shareholders need to travel to India to register a subsidiary?
  No. The entire incorporation process is executed digitally through the Ministry of Corporate Affairs (MCA V3) portal. Foreign directors and authorized representatives of the parent company can sign the incorporation documents in their home country, have them notarized and apostilled (or consularized), and complete video KYC for their Class-3 Digital Signature Certificates (DSC) remotely.
• 5. What is the realistic timeline to set up a Subsidiary Company in India?
  Once the apostilled documents from the foreign parent company arrive in New Delhi, obtaining DSCs, name reservation, and the Certificate of Incorporation (COI) with PAN and TAN via MCA V3 SPICe+ takes approximately 10 to 15 working days. Opening the Indian bank account, remitting initial share capital via SWIFT, allotting shares, and filing Form FC-GPR and Form INC-20A typically takes an additional 2 to 4 weeks.
• 6. What is the minimum capital required to incorporate a foreign subsidiary in India?
  There is no statutory minimum paid-up capital requirement under the Companies Act, 2013 to incorporate a Private Limited Subsidiary. However, from a practical banking, FEMA, and working-capital standpoint, most foreign parent companies initialize their Indian subsidiary with an authorized and paid-up share capital between INR 1,00,000 and INR 10,00,000 (approximately USD 1,200 to USD 12,000) or higher depending on initial operational expenses.
• 7. How is an Indian Subsidiary taxed compared to a Branch Office or Project Office?
  A Subsidiary Company incorporated in India is treated as a domestic Indian company under the Income Tax Act. Under Section 115BAA, it is eligible for a concessional base corporate tax rate of 22% (an effective tax rate of 25.17% inclusive of surcharge and health & education cess) and is exempt from Minimum Alternate Tax (MAT). In contrast, a Branch Office or Project Office is taxed as a foreign company at a base rate of 35% plus surcharge and cess (effective rate of 36.40% to 38.22%).
• 8. What is Form FC-GPR and what happens if it is not filed within 30 days?
  Form FC-GPR (Foreign Currency - Gross Provisional Return) is a mandatory FEMA reporting form filed inside the Single Master Form (SMF) on the RBI FIRMS portal whenever an Indian company issues shares to a non-resident investor. The company must allot shares within 60 days of receiving the inward remittance and file Form FC-GPR within 30 days of share allotment. Delayed filings attract a Late Submission Fee (LSF) calculated by the RBI or require compounding of contravention.
• 9. Does an Indian Subsidiary of a foreign company qualify as a "Small Company" under the Companies Act?
  No. Under the proviso to Section 2(85) of the Companies Act, 2013, a holding company or a subsidiary company is expressly excluded from the definition of a "Small Company", regardless of how small its paid-up capital or turnover is. Consequently, every foreign subsidiary must hold at least 4 Board Meetings per calendar year, prepare a Cash Flow Statement as part of its financial statements, and file regular annual return Form MGT-7.
• 10. When does an Indian Subsidiary require prior Government Approval under Land-Bordering Country (LBC) rules?
  Under the Foreign Exchange Management (Non-Debt Instruments) Rules read with Press Note 3 (2020) and the recalibrated Press Note 2 (2026 Series), prior Government of India approval via the National Single Window System (NSWS) is required if the investing entity is incorporated in a country sharing a land border with India (such as China, Bangladesh, Pakistan, Nepal, Myanmar, Bhutan, or Afghanistan), or where citizens/entities of an LBC hold more than 10% beneficial ownership or exercise control over the investing entity.
• 11. How can an Indian Subsidiary repatriate profits to its foreign parent company?
  An Indian Subsidiary can repatriate post-tax profits to its overseas parent company through dividend declarations, share buybacks, or inter-company royalty/management/technical service fees. Dividends can be remitted freely through an Authorized Dealer (AD) Category-I Bank without prior RBI approval, subject to withholding tax (20% under domestic law, often reduced to 5%, 10%, or 15% under India's DTAA treaties) and Chartered Accountant certification in Form 15CA and Form 15CB.
• 12. Are transactions between the foreign parent and the Indian Subsidiary subject to Transfer Pricing?
  Yes. Because the foreign parent and the Indian subsidiary are Associated Enterprises (AEs) under Section 92A of the Income Tax Act, any cross-border transaction between them—such as captive software development, back-office support, management charges, royalty, or reimbursement of expenses—must be priced at Arm's Length. The subsidiary must maintain contemporaneous Transfer Pricing documentation and obtain an annual Chartered Accountant audit report in Form 3CEB by 31st October.
• 13. What is the annual FLA Return and who must file it?
  The Foreign Liabilities and Assets (FLA) Return is an annual statutory return mandated by the Reserve Bank of India under FEMA. Every Indian company that has received Foreign Direct Investment (FDI) in the current or any previous year must file the FLA Return on the RBI FLAIR portal on or before 15th July every year based on audited or provisional financial statements.
• 14. How can we contact K.B. Chandna & Co. to start our Subsidiary Company registration in India?
  You can contact K.B. Chandna & Co. directly at our Head Office at E-27, South Extension II, New Delhi – 110049, India, call or WhatsApp our partners at +91 9811073984, or email [email protected] to schedule an online video consultation or in-person meeting.