Benefits of Foreign Wholly Owned Subsidiary

1. Complete Control: As a wholly owned subsidiary, the foreign parent company retains full ownership and control over the operations, decision-making, and profit repatriation.
2. Limited Liability: The subsidiary is treated as a separate legal entity, meaning the parent company’s liability is limited to its investment in the subsidiary.
3. Market Penetration: Establishing a subsidiary enables foreign companies to enter the Indian market effectively and adapt to local consumer preferences.
4. Access to Local Resources: Subsidiaries can take advantage of local resources, including talent, suppliers, and distribution networks.
5. Regulatory Compliance: Operating as a subsidiary allows businesses to comply with local regulations more easily than other structures, such as branch offices.
6. Easier Funding: Subsidiaries can access local financing options, including bank loans and government grants.

Eligibility Criteria to register a Foreign Wholly Owned Subsidiary in India

To register a Foreign Wholly Owned Subsidiary in India, certain eligibility criteria must be met:

1. Foreign Company: The parent company must be a foreign entity, registered and operating outside India.
2. Business Activity: The subsidiary should engage in activities permissible under the Foreign Exchange Management Act (FEMA) and the Reserve Bank of India (RBI) guidelines.
3. Minimum Capital Requirement: The subsidiary must meet the minimum capital requirements set by the government, typically ranging from ?1 lakh to ?5 lakh, depending on the nature of the business.

Requirements for Registration

1. Name of the Subsidiary: The proposed name must comply with the guidelines set by the Ministry of Corporate Affairs (MCA) and should not be similar to existing companies.
2. Registered Office: The subsidiary must have a registered office in India, which will serve as its official address.
3. Director Requirements: At least one director of the subsidiary must be a resident of India.
4. Bank Account: A bank account must be opened in the subsidiary's name to facilitate transactions.
5. Business Plan: A detailed business plan outlining the proposed activities, financial projections, and market analysis is often required.

Documents for the Registration of Foreign Wholly Owned Subsidiary in India

The following documents are typically required for the registration process:

1. Certificate of Incorporation of the Parent Company: Proof of the foreign company's existence and registration.
2. Memorandum and Articles of Association: These documents outline the company’s objectives, rules, and regulations.
3. Board Resolution: A resolution from the parent company’s board of directors approving the establishment of the subsidiary.
4. Proof of Identity and Address of Directors: This includes passports, utility bills, or any government-issued identification.
5. Bank Account Statement: A statement from the bank showing the funds transferred for the subsidiary's initial capital.
6. NOC from the Parent Company: A No Objection Certificate from the parent company regarding the establishment of the subsidiary in India.

Procedure for Registration for a Foreign Wholly Owned Subsidiary

The registration process for a Foreign Wholly Owned Subsidiary in India involves several steps:

Step 1: Obtain Digital Signature Certificate (DSC)

All directors of the subsidiary must obtain a Digital Signature Certificate to sign electronic documents.

Step 2: Obtain Director Identification Number (DIN)

Each director must apply for a Director Identification Number, which is a unique identification number issued by the MCA.

Step 3: Name Reservation

The next step is to apply for the reservation of the subsidiary’s name through the RUN (Reserve Unique Name) form on the MCA portal.

Step 4: Prepare Documents

Prepare all required documents, including the Memorandum and Articles of Association, and ensure they are duly signed and notarized.

Step 5: File Incorporation Documents

File the incorporation documents with the Registrar of Companies (RoC) through the SPICe (Simplified Proforma for Incorporating Company Electronically) form. The following documents are typically submitted:

• SPICe form
• Memorandum and Articles of Association
• Declaration by the directors
• Proof of registered office
• Identity and address proofs of the directors

Step 6: Payment of Fees

Pay the requisite registration fees online as specified by the RoC.

Step 7: Issuance of Certificate of Incorporation

Once the documents are verified, the RoC will issue a Certificate of Incorporation, officially recognizing the subsidiary as a legal entity.

Step 8: Obtain PAN and TAN

After incorporation, the subsidiary must apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) from the Income Tax Department.

Step 9: Open a Bank Account

Finally, the subsidiary must open a bank account in its name to carry out financial transactions.

Other Considerations

1. Compliance: After registration, the subsidiary must adhere to all Indian laws and regulations, including tax laws, labor laws, and corporate governance standards.
2. Annual Filings: The subsidiary must file annual returns and financial statements with the RoC and comply with the provisions of the Companies Act.
3. Foreign Exchange Management Act (FEMA): Compliance with FEMA regulations is crucial, especially regarding foreign investments and remittances.
4. Tax Obligations: The subsidiary will be subject to Indian tax laws, including corporate tax, Goods and Services Tax (GST), and others.