Subsidiary Company
All shares of company are owned by another company either in India or abroad. Then such company is called a subsidiary company.
Foreign Branch is not advisable in india
It is always better to start a fully owned subsidiary in India
There are many reasons for this
1. civil and criminal liability is always on the managing director of the foreign company. He has to attend india court in case of court proceedings
2. Tax rate is 40% instead of 30%
3. the tax authorities would ask for you global accounts and try to tax your global profits saying major work is being done from india.
for subsidiary company these problems are not there
Procedure to open a subsidiary company.
The Holding Foreign company has to pass resolution in its board meeting that it is proposed to setup a subsidiary in India and nominate atleast two persons to sign the memorandum and articles of association and hold the shares of the subsidiary on its behalf. This resolution needs to be notarised.
Other procedure will be the same as that of a private limited company.
sample format of the resolution (to be taken on Letter head of Holding Co)
EXTRACT FROM THE ACTION BY UNANIMOUS WRITTEN CONSENT OF THE BOARD OF DIRECTORS OF _______________ company, DATED ___________.
INCORPORATION OF A WHOLLY OWNED SUBSIDIARY OF _____________ IN INDIA
"Resolved that a wholly owned subsidiary of _____________________ ("the company") be incorporated in India at Hyderabad with the name ___________________or such other name as the Registrar of Companies may approve.
FURTHER RESOLVED that the company, one of the subscribers to the memorandum and articles of association of the Indian subsidiary, will subscribe 9999 equity shares of Rs. 10/- each in its name and Mr. _______________ s/o ___________ is hereby authorized to sign on behalf of the company.
Further the other subscriber Mr. _________________s/o_______________, director of the company, will subscribe one equity share as a nominee of ___________ (foreign hoding Co).
FURTHER RESOLVED that _____________ s/o _____________ and Mr. ___________________s/o_____________ be and is hereby authorized to sign the memorandum and articles of association of __________________ India Private Limited, the Indian subsidiary, on behalf of the company and also to appoint/execute power of attorney(s) to take all necessary steps and execute and cause to be execute all necessary documents as may be necessary for the purpose of incorporating the Indian subsidiary at Hyderabad in India ".
Certified to be a true copy
For _____________________________ (Foreign Holding Company)
Name:
Designation
Place:
Date:
Foreign Branch is not advisable in india
It is always better to start a fully owned subsidiary in India
There are many reasons for this
1. civil and criminal liability is always on the managing director of the foreign company. He has to attend india court in case of court proceedings
2. Tax rate is 40% instead of 30%
3. the tax authorities would ask for you global accounts and try to tax your global profits saying major work is being done from india.
for subsidiary company these problems are not there
Procedure to open a subsidiary company.
The Holding Foreign company has to pass resolution in its board meeting that it is proposed to setup a subsidiary in India and nominate atleast two persons to sign the memorandum and articles of association and hold the shares of the subsidiary on its behalf. This resolution needs to be notarised.
Other procedure will be the same as that of a private limited company.
sample format of the resolution (to be taken on Letter head of Holding Co)
EXTRACT FROM THE ACTION BY UNANIMOUS WRITTEN CONSENT OF THE BOARD OF DIRECTORS OF _______________ company, DATED ___________.
INCORPORATION OF A WHOLLY OWNED SUBSIDIARY OF _____________ IN INDIA
"Resolved that a wholly owned subsidiary of _____________________ ("the company") be incorporated in India at Hyderabad with the name ___________________or such other name as the Registrar of Companies may approve.
FURTHER RESOLVED that the company, one of the subscribers to the memorandum and articles of association of the Indian subsidiary, will subscribe 9999 equity shares of Rs. 10/- each in its name and Mr. _______________ s/o ___________ is hereby authorized to sign on behalf of the company.
Further the other subscriber Mr. _________________s/o_______________, director of the company, will subscribe one equity share as a nominee of ___________ (foreign hoding Co).
FURTHER RESOLVED that _____________ s/o _____________ and Mr. ___________________s/o_____________ be and is hereby authorized to sign the memorandum and articles of association of __________________ India Private Limited, the Indian subsidiary, on behalf of the company and also to appoint/execute power of attorney(s) to take all necessary steps and execute and cause to be execute all necessary documents as may be necessary for the purpose of incorporating the Indian subsidiary at Hyderabad in India ".
Certified to be a true copy
For _____________________________ (Foreign Holding Company)
Name:
Designation
Place:
Date: