Setting up Subsidiary Company in India
Foreign Company can Form subsidiary company in India and can own 100% share holding in all sector except certain negative sector or industries as prescribed in FDI and management can be Foreign National or Representative of Foreign National.
Foreign Company does not require any approval to set up a subsidiary company in India if their business is not in the negative sector otherwise they need to take Government approval ie Approval from Foreign Investment Promotion Board.
Pertinent Issues Related with Setting up Subsidiary Company in India like:
- Where to locate the Subsidiary Company in India
- Corporate Structure
- Initial Share Holding Agreement
- Initial Director Agreement
- Selection of Managing Director
- Selection of Board of Director
- Corporate Control of Subsidiary
- Intellectual Property Ownership
- Intellectual property delegation
- Operational Implication and Related Issue
- Moral Right Issues
- R & D Agreement Provision
- Employment Issues
- Use of Mauritious Intermediate Subsidiary
- Stock Option for Employee in India
Subsidiary Incorporation Task and Schedule:
A number of the tasks can be done in parallel after incorporation occurs.
Acting in parallel will keep the total time as short as possible.
First Step, Incorporation takes 15 Days time:
- Engage service provider to complete incorporation process
- Enter into agreement between parent company, service provider and initial Indian directors and shareholders
- Checking of name availability and name reservation
- Prepare and file charter documents (Memorandum of Association and Articles of Association), with registration fee and stamp duty
- Appointment of initial directors
- Issuance of shares to initial shareholders
- Print share certificates and prepare minute book
- Register company and pay registration and filing fees
Next Steps:
- Open bank account Within 15-30 days of start
- Tax Registrations, including application for permanent account number and tax Within 45 days of Tax Deduction number
- Registrations under professional tax, sales tax and Shops and Establishment laws Within 30 days of start
- Register with Software Technology Park (STP) Within 45 to 90 days of start
- Approval of Customs Dept. for bond and facility license, and import/export codes Within 60-90 days of star
- Transfer of shares held by initial Indian shareholders to the parent Within 45 days of start company/nominees
Total Time = 60-90 days
