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Company for Foreign Subsidiary (Wholly Owned Subsidiary)
A subsidiary is a company with voting stock (that is
more than 50%) controlled by another company, usually referred to as
the parent company or the holding company. In cases where a
parent company owns a foreign subsidiary, the subsidiary must follow the laws
of the country where it is incorporated and operates. Hence, if a foreign
subsidiary is incorporated in India, then it has to follow the applicable laws
in India
Foreign Subsidiary can be formed in two ways as
follows:
1. Foreign Subsidiary: A company who’s more
than 50 % of shares is held and controlled by foreign entity. Hence, if a
foreign subsidiary is incorporated in India, then it has to follow the
applicable laws in India.
2. Wholly owned Subsidiary: A company who’s
all i.e. 100 % of shares is held and controlled by foreign entity. It is also
formed and run by laws applicable in India.
If foreign Entity want to Incorporated or grow its
business in India, they may register a private company or a public company
depending upon the desirability and need of Foreign Entity. A private limited
company is closely held company and enjoins privileges given by the Companies
Act, 2013 and easy to register. Generally, foreign companies incorporate
private limited company in India.
Investment of FDI in private company has become easy
as except few sectors which are reserved, most of the sectors are opened for
Foreign Investment.
Note:
• For
NRI’s and Foreign National below mentioned documents must be apostilled by
Consulate of Indian Embassy or attested by Foreign Public Notary depending upon
whether country is the member of Hague convention or not.