Friday, March 4, 2011

FORMATION OF A WHOLLY OWNED SUBSIDIARY COMPANY IN INDIA/ CHECKLIST FOR INCORPORATING WHOLLY OWNED SUBSIDIARY COMPANY


Company Registration in India

This Article is provides information about the stages and documents required for incorporation of a private limited company in India which is subsidiary of a foreign company in India. The procedure for registering a subsidiary company in India is very simple and will take around a maximum of 15 days to complete. The followings are the detailed requirements, procedure and system for subsidiary formation in India:

A private company is defined under Section 3(1)(iii) of the CA Act  as a company which -

  • Has a minimum paid up share capital of INR 100,000 or a higher paid-up capital as may be prescribed by its articles of association

  • Restricts the right to transfer shares by its articles of association.

  • Prohibits any invitation to the public to subscribe for any shares in, or debentures of, the company.

  • Prohibits any acceptance of deposits from persons other than members, directors or their relatives.

  • Can be formed with a minimum of two members and two directors.

  • Limits the number of its members (shareholders) to fifty not including (i) persons who are in the employment of the Company and (ii) persons who, having been formerly in the employment of the Company, were members of the Company while in that employment and have continued to be members after the employment ceased. 

Therefore, minimum capital required for incorporation of a private company is Indian Rupees 1(one) lakh and there should be at least one two members (shareholders) and two directors).

Incorporation of a private limited company in India broadly involves the following stages:
STAGE - I

OBTAINING DIRECTORS IDENTIFICATION NUMBER (DIN) & DIGITAL SIGNATURES

Directors Identification Number (DIN)

Prior to incorporation of a company, the proposed directors of the company are required to obtain Directors Identification Number (“DIN”) from the Ministry of Company Affairs by making an online DIN application in Form DIN 1. Form DIN 1 is approved by the DIN Cell of the Ministry of Corporate affairs.

The said Form DIN 1 is to be filed with the scan copies of the applicant’s photograph, identity proof, a valid residential proof and a verification/ declaration in the prescribed format to be given by the applicant (who is applying for the DIN). Upon online submission of the Form DIN 1 and online payment of the fee, a permanent DIN to the director will be allotted immediately.

The following documents are required to make a DIN application for each of the proposed director(s):

(i)                       Identity proof

For identity proof, a copy of passport or copy of permanent account number card (PAN card) is required to be provided. Please note that in case of a foreign national only passport is acceptable as identity proof and in case of an Indian national copy of PAN card is must.

(ii)                     Residence proof

For residence proof, a copy of voter’s identity card or valid driving licence or latest bank statement duly certified by the respective bank or utility bill (not older than two months) is required to be provided.

(iii)        One passport size color photograph in jpeg format. In addition one more photograph is required which should be separately pasted on a plane paper.

(iv)       Verification/ Declaration in the prescribed format on a 10 Rupees stamp paper, duly notrized by a notary public. 

All the aforementioned documents should be attested by a notary public in the country of residence of the applicant.

Digital Signature Certificate (“DSC”)

Any one of the proposed directors is required to obtain digital signature certificate (“DSC”) in India for online filing of e-Forms with the concerned Registrar of Companies (“ROC”). For obtaining DSC an application is made under the signatures of the director who intends to obtain DSC along with the copy of his identity proof and a copy of his residence proof.  The following documents are required to make a DSC application for each of the proposed director(s):

(i)                       Identity proof

For identity proof, a copy of passport or copy of permanent account number card (PAN card) is required to be provided. Please note that in case of a foreign national only passport is acceptable as identity proof and in case of an Indian national copy of PAN card is must.

(ii)                     Residence proof

For residence proof, a copy of voter’s identity card or valid driving license or latest bank statement duly certified by the respective bank or utility bill (not older than two months) is required to be provided.

(iii)                   One passport size color photograph. Please note that the photograph should be pasted on the application form and cross signed by the director (applicant).

(iv)                   DSC application form duly signed by the director (applicant)

The identity and residence proof of the applicant as aforesaid should be attested by a notary public in the country of residence of the applicant.

STAGE - III

APPLICATION FOR NAME APPROVAL OF THE PROPOSED COMPANY WITH THE ROC

After obtaining the DIN and DSC as aforesaid, an online application for availability of the proposed name (in the prescribed Form 1A), along with six proposed names in order of preference (may be less than six), each one indicating, as far as possible, the main objects (principal activities) of the company, shall be submitted to the ROC. The name of a private company should end with the words “Private Limited”.

If the proposed company is a subsidiary of body corporate incorporated outside India, Form 1A is required to be e-filed along with the following attachment at the website of Ministry of Company Affairs, India:

(a)   Board Resolutions by the parent company (separately from each subscriber to the proposed entity) indicating its intention to incorporate a subsidiary in India and authorizing a director to issue specific power of attorney. 

(b)   Power of Attorney(s) (separately from each subscriber to the proposed entity) authorizing someone to represent the subscribers before the concerned ROC to liaise with  all concerned authorities and officials in the matter of incorporation.

(c)    No Objection Letter from the parent company (separately from each of such   entity whose name or part thereof will be used in the name of the proposed entity) for use of the name of the parent company or part thereof in the name of the proposed company. 

(d)   Charter Documents of the parent company i.e. Certificate of Incorporation of the  parent company.

Please note that all of the aforementioned documents should be notarized by a Notary Public in the country where the registered office of the entity (which has issued the said document), is situated and further Apostilled/ endorsed at the Indian Consulate in the country where the registered office of the entity (which has issued the said document) is situated. 

(e)    A brief writ-up on the main objects proposed to be carried out by the Company.

(f) Proof of ownership of the registered office of the company. In case the property is not taken on lease by the Company himself, a no objcetion certificate would be required 


STAGE IV

DRAFTING AND STAMPING OF MEMORANDUM & ARTICLES OF ASSOCIATION (“MOA AND AOA”)

MOA and AOA are to be drafted in compliance with the provisions of the Act. Adequate stamp duty would be required to be paid thereupon based on the authorised capital of the company. The stamp duty on MOA and AOA shall be paid along with the filing fee payable at the time of filing of incorporation related documents.


STAGE V

INCORPORATION DOCUMENTS TO BE FILED WITH THE ROC

After the name approval, the following forms have to be e-filed with the ROC after having been digitally signed by any of the proposed directors. The lists of documents are as follows:

(i)  Form 1 -   Declaration of compliance of all the requirements of the Act along with the memorandum of association of the company;

(ii)   Form 18 - Situation of the registered office of the Company; and

(iii) Form 32 - Particulars of Directors of the Company along with the consent of directors.

All the aforesaid incorporation documents (scanned copies of the executed version) have to be submitted with the ROC as attachments to the E form 1 alongwith:

(i)                 The original copies of MOA and AOA with the subscriber pages duly executed by or on behalf of the subscribers and witnessed.

(ii)               Power of Attorneys from the subscribers to the MOA and AOA appointing representatives to incorporate the company and to make corrections in the MOA and AOA. The said powers of attorneys are required to be notarized and attested by Indian embassy abroad.

The ROC then scrutinizes the above-mentioned documents and if necessary, directs the authorized person to make necessary corrections therein. The ROC after being satisfied that all the documents are complete, issues the certificate of incorporation of the Company, which is the conclusive proof of registration of the company in India.

      Thank you    
      Devesh Pandey 
       +91 9811237186
      csdeveshpandey@gmail.com

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9 comments:

neha said...

Good research and simplified language used in the procedure makes the understansing all the more simple. Good luck Tk cr.

CSDEVESH PANDEY said...

Thannk you neha for suchappreciatiron

feel free to ask any query through email my

Prathamesh said...

Hello Devesh Sir,

You have mentioned minimum authorised capital requirement of Rs.500000/- for incorporating a WOS of a foreign co. in India.

Can you pl. provide me the source for the same?

Thanks,

Prathamesh.

Prathamesh said...

Hello Devesh Sir,

Read your article. It was very helpful. I have one query. In the article, you have mentioned minimum capital requirement of Rs.5 Lacs for incorporating a WOS of a foreign company in India.

Can you please provide me the source for the same?

Thanks,

Prathamesh.

Prathamesh said...

Hello Devesh Sir,

Read your article. It was very helpful. I have one query. In the article, you have mentioned minimum capital requirement of Rs.5 Lacs for incorporating a WOS of a foreign company in India.

Can you please provide me the source for the same?

Thanks,

Prathamesh.

MANISH KUMAR KALANTRI said...

Dear Sir,
Thanks
Manish kumar kalantri

MANISH KUMAR KALANTRI said...

Dear Sir,
Thanks
Manish kumar kalantri

Ambika Sharma said...

Dear Sir,

I read your blog its very helpful.
Sir i want to know the procedure to become a public company WSO.
Can a public ompany become WSO?? if yes than its minimum no. of memeber will fall below 7. how to do that?
Please reply sir its urgent

Ambika Sharma said...

Dear Sir,

I read your blog its very helpful.
Sir i want to know the procedure to become a public company WSO.
Can a public ompany become WSO?? if yes than its minimum no. of memeber will fall below 7. how to do that?
Please reply sir its urgent