Procedure of Establishing a Wholly Owned Subsidiary Company in India

This memo briefly sets out the procedure for incorporation of a wholly owned subsidiary company in India.

Director Identification Number (‘DIN’) & Digital Signature Certificate (‘DSC’)

DIN and Digital Signature Certificate for all the proposed Directors of the Company must be obtained. For obtaining DIN an application in Form No. DIR – 3 should be filed on MCA Portal. DIN application is processed and approved by the Central Government through the office of Regional Director, Ministry of Corporate Affairs. Form No. DIR – 3 must be accompanied by self attested Identity Proof (Copy of Passport is mandatory) and Address Proof (Utility Bills/Family Registers etc) and one recent passport size color photograph of the Applicant. All the documents must be attested by a practicing professional viz. Practicing Company Secretary, Practicing Cost & Management Accountant or by a Practicing Chartered Accountant. In case the ID Proof and Address Proof is not in the English language, then a certified translated copy of the same must be provided. All the above said documents should be notarized and counsularised from Indian Embassies in that Country.

Name Approval

Name approval has to be obtained from the Registrar of Companies (“RoC”) by submitting an application in e-Form INC – 1. For this the promoters need to decide various items, which are mentioned in e-Form 1. The name once approved by the authority is valid for 60 days. The Subscriber to the Memorandum and Articles of Association shall be the applicant for the availability of name application. A certified true copy of Board Resolution of the holding or parent copy, giving no objection for the incorporation of a Wholly Owned Subsidiary in India and authorising any person to sign the application on its behalf should be provided. The certified true copy of the Board resolution should also be notarized and counsularised from the Indian Embassies located in the country, where promoters or the parent company is situated.

Memorandum and Articles of Association

After obtaining name approval, the draft Constitutional Documents of proposed Company i.e. Memorandum of Association (MOA) and Articles of Association (AOA) is to be drafted and then filed with the RoC along with the forms / documents stated below.

Filing of Forms

The following forms are required to be filed with the RoC:

à        e-SPICE 32 (Application for Company registration);

à        e-SPICE 33 (Memorandum of Association of the Company);

à        e-SPICE 34 (Articles of Association);

à        Form 49A (An application for allotment of Permanent Account Number (PAN) by the Income Tax Department to the company after incorporation);

à        Form 49B (An application for allotment of Tax Account Number (TAN) by the Income Tax Department to the company after incorporation);

à        A PAN undertaking by the promoters;

à        A Power of Attorney to be executed by subscribers and proposed directors (authorisation by the promoters of the company to a person/s to carry out appropriate changes as suggested by the RoC in any of the incorporation papers that have been filed).

Clarifications/additional information required by RoC

After all the incorporation papers are filed and reviewed by the RoC, the RoC may require certain clarifications. These clarifications or enquiry need to be satisfied by the person who has been authorised to do so by the Power of Attorney filed with the RoC.

Also read Article at “The Insolvency and Bankruptcy Code, 2016 – Procedure and Key Highlights”

Certificate of Incorporation

Once all clarifications are provided, the Certificate of Incorporation is issued by the RoC and the company is deemed to be incorporated from the date of the Certificate of Incorporation. At this stage a Permanent Account Number (PAN) and Tax Account Number (TAN) is also issued to the Company by the Income Tax Department.

Indicative Time Frame

The entire procedure can be completed on a fast track basis within 7 to 10 days.

Information required:

Names, addresses, father’s name and nationality of the proposed directors or promoters of the proposed Company including copy of Passport of all proposed Directors and subscribers;

Copy of Address Proof (Family Register/Bank Statement/Utility Bills etc) of all proposed Directors and Promoters; if the above said documents are not in English then the certified translation copy is required.

Passport size photo of all promoters and proposed Directors;

In your case we need Certificate of Incorporation, Memorandum & Articles of Association (Charter Documents), a certified copy of the board resolution of the promoter company clearly stating who would be the authorised representative signing the subscription pages of the MOA and AOA (A draft is annexed hereto at Annexure I) and the number of shares to which the two subscribers would be subscribing in the proposed Indian Company;

All the above said documents should be notarized and counsularised from Indian Embassies in that Country.

If the any of Documents are not in English language, the certified English Translation will be required.

Main objects of the proposed Indian Company to be set out clearly in the name availability application (e-Form INC – 1) as the ROC does not allow addition of new clause at the time of incorporation;

In case of wholly owned subsidiary, as the proposed Indian company would be using the name of the Holding Company, then a NOC from the Holding Company for using its name shall also be given along with the application for availability of name. This would also facilitate expediting the name availability application;

If the promoter has any trademarks registered in India, a copy of such registration certificate as an additional justification for the name of the proposed company;

[Draft to be typed on the letterhead of Holding Company or Body Corporate]

CERTIFIED TRUE COPY OF THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF ______________     ., HELD AT [•], ON [•]

______________________________________________________________________________

INCORPORATION OF WHOLLY OWNED SUBSIDIARY COMPANY:

“RESOLVED THAT, subject to obtaining all requisite approvals, the Company do hereby promote a wholly owned subsidiary in India with name and style of “__________________________” and/or any other name as may be made available/approved by the Registrar of Companies (“ROC”), ………………….

RESOLVED FURTHER THAT consent of the Board be and hereby recorded in making investment of Rs. ………………./- (being …………… Equity shares of Rs. 10/- each) of which …………… Equity Shares shall be subscribed in the very name of the Company and the balance ……. (………..) Equity shares shall be subscribed in the name of Mr. ______________, nominated in this behalf to hold …… () Equity Shares (on behalf of the Company) and for acting as co-subscriber alongwith the Company so as to ensure that the total number of shareholders in the proposed company is not less than the statutory minimum requirement.

RESOLVED FURTHER THAT Company does not have any objections to use of the word “_____________________” in the name of proposed company.

RESOLVED FURTHER THAT Mr. _____________ , __________ of Company be and is hereby authorized as the authorized representative (“Authorized Representative”) of the Company to apply to the Registrar of Companies (“ROC”), ………………………………, for seeking availability of name and also to do all needful acts as may be required towards incorporation of the proposed Subsidiary and to complete all procedural formalities incidental and ancillary thereto, including without limitation signing of various forms and documents.

RESOLVED FURTHER THAT Mr. ______________, ____________ of the Company be and is hereby authorized as an Authorized Representative of the Company to:

à        subscribe to 9,999 (Nine thousand nine hundred ninety nine) shares of Rs. 10/- each in the paid up share capital of the Proposed Subsidiary for and on behalf of the Company;

à        Sign the Memorandum and Articles of Association of the Proposed Subsidiary for and on behalf of the Company; and

à        Sign all other papers, forms and documents required for incorporation of the proposed Subsidiaries in Delhi, India for and on behalf of the Company.

RESOLVED FURTHER THAT Mr. _____________, nominee of the Company, be and is hereby authorized to subscribe to … (…) share of Rs. 10/- each in the Proposed Subsidiary for and on behalf of the Company and sign all the papers and documents required for incorporation of the Proposed Subsidiary.

RESOLVED FURTHER THAT the Authorized Representative and nominee be and are hereby authorized to sub-delegate any of the powers herein conferred upon them to such persons as they may deem necessary, advisable or appropriate.

RESOLVED FURTHER THAT any and all actions of the Authorized Representative and nominee in pursuant to, or in furtherance of the intent and purposes of the foregoing resolutions, are hereby in all respects adopted, approved, confirmed and ratified as the valid and subsisting acts of this Company.

RESOLVED FURTHER THAT the following persons be and are hereby named as the first Directors of the Proposed Subsidiary Company in the Articles of Association thereof at the time of incorporation:

Mr. _________

Mr. ______

RESOLVED FURTHER THAT Mr. ___________, __________ be and is hereby authorized to execute, sign, seal and deliver in the name and on behalf of the Company, any and all agreements, deeds, forms, notices, communications or documents relating to, or ancillary to, the incorporation of the Proposed Subsidiary, with full power to approve any amendment, alteration or modification to such agreements, deeds or documents, and to do and execute such other deeds, documents, acts and things as may be necessary, desirable or expedient for the purpose of giving effect to any of foregoing resolutions.

RESOLVED FURTHER THAT a Certified true copy of the foregoing resolution may be given to anyone concerned or interested in the matter by any Director of the Company.

Certified to be true

For ______________

Director

Note: This document is to be notarized and consularized by the Indian Embassy in the home country. Though apostillized documents are legally mandated to be accepted by the Registrar, in practice they are reluctant to accept them. 

Author : CS Prashant Kumar

Mr. Prashant is a New Delhi based Company Secretary and a registered Trademark Attorney. He helps entrepreneurs and business owners start and grow their business.

Mr. Prashant can be reached via email at prashantmishra1986@gmail.com or at +91 9818338191.

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