Process Incorporation of Foreign Subsidiary / WOS

Whenever anyone incorporates a Company in India as ‘Subsidiary” or “Wholly-owned Subsidiary (WOS)” of a Company incorporated outside India. Many questions came into notice like:

(i) What are the information/ Documents required from a Foreign Company?

(ii) Whether the presence of an authorized representative of a foreign Company is mandatory in India at the time of signing of documents.

(iii) What are the provisions in respect of Notary / Apostil etc.

(iv) Which ID Proofs / Identity proof of foreign subscribers required by the Company etc. etc.

A. Login on MCA Website

Applicants have to login into their account on MCA Website. (Pre-existing users can use the earlier accounts or new users have to create a new account.)

After Login the following screen will appear:

B. Steps: II Click on New Application and the following window will open:

(This form can’t be downloaded; it has to be filled on real-time basis)

Details required to be mentioned in the online form:

(i) Type of Company (i.e. Producer, Part I, OPC, Section 8, etc.)

(ii) Class of Company (whether Private, Public)

(iii) Category of Company (whether Company limited by shares, limited by Guarantee or unlimited)

(iv) Sub-category Union Government, State Government, Non-Government Company, Subsidiary of Company incorporated outside India)

(v) Main Division of Industrial Activity (enter number belonging to Industrial Activity)

(vi) Description of the main division

(vii) Particulars of Proposed or Approved Name. (User has to enter the name he wants to reserve, for incorporation of a new company. Users are requested to ensure that the proposed name selected does not contain any word which is prohibited under Section 4(2) & (3) of the Companies Act, 2013 read with Rule 8 of the Companies (Incorporation) Rules, 2014. Users are also requested to read and understand Rule 8 of the Companies (Incorporation) Rules, 2014 in respect of any proposed name before applying for the same. For Name Search: http://www.mca.gov.in/mcafoportal/showCheckCompanyName.do)

Stakeholders are requested to also check the Trademark search to ensure that the proposed name is not in violation of provisions of Section 4(2) of the Companies Act, 2013, failing which it is liable to be rejected. For Trade Mark Search: http://www.ipindia.nic.in/index.htm

Note: Two fields are available ie the two proposed names can be entered

(i) Choose File (Any attachment)

This option is available to upload PDF documents. It is not mandatory to attach any document except in the case where a name requires the approval of a Sectoral Regulator or NOC etc, if applicable, as per Companies (Incorporation) Rules, 2014. Only one file is allowed, if have multiple then scan them into one document. The attachment size cannot exceed 6 MB for both Part A and Part B taken together.

Steps: III Fill the given Information and save the application as follows:

• Fill the Information
• Save the Application
• Submit the Application

After Submit below given window will open:

C. Here stake holder having two options:

Option 1: Submit Name application and make payment of the same for name approval. Payment of Rs. 1,000/-

Option 2: Click on “Proceed for Incorporation”

After click on “Proceed for Incorporation” below given window will open:

NOTE: * Approval of Name through “PART-A” is an optional way. Companies can also directly apply for the Information after continuation with PART B form.

It is advisable to go through PART-A route

Part B- Incorporation of Company

STEP – II: Information/ Documents required from foreign Company

a) Apostille / Notarized copy of resolution of foreign Company ‘mentioning the name of authorized representative, no. of subscription of shares’.

b) Apostille/ Notarized copy of ID Proof of authorized representative, if such person is non – resident of India.

c) Apostille/ Notarized copy of Charter of Foreign Company.

d) Name of one Resident Director.

e) Name of Nominee (in case of incorporation of WOS)

STEP – III: Preparation of Documents for Incorporation of Company:

After approval of name or for Incorporation of Company applicant have to prepare the following below mentioned Documents;

♦ Memorandum of Association of Company (Physical copy of MOA shall be prepare; e-MOA (INC-33) can’t be prepared). (Duly apostille or notarized in country of origin).

♦ Article of Association of Company (Physical copy of AOA shall be prepare; e-AOA (INC-34) can’t be prepared). (Duly apostille or notarized in country of origin).

♦ INC-9 declaration by first subscriber(s) and director(s) (Duly apostille or notarized in country of origin). If all the subscribers having PAN/DIN then INC-9 shall be e-INC-9 download from dashboard.

♦ DIR-2 declaration from first Directors along with Copy of Proof of Identity and residential address. (Duly apostille or notarized in country of origin).

♦ Declaration from the foreign subscribers in respect of not having PAN. (Duly apostille or notarized in country of origin).

♦ NOC from the owner of the property.

♦ Proof of Office address (Conveyance/ Lease deed/ Rent Agreement etc. along with rent receipts);

♦ Copy of the utility bills (not older than two months)

♦ In case of subscribers/ Director does not have a DIN, it is mandatory to attach:Proof of identity and residential address of the subscribers (Duly apostille or notarized in country of origin)

♦ Digital Signature with only one Subscriber is enough for Incorporation of Company.

♦ DIR-2 from the Resident Director along with self attested copy of PAN and resident Proof.

STEP – IV: Fill the Information in Form:

Once all the above mentioned documents/ information are available. Applicant has to fill the information in the e-form “Spice+”.

Features of SPICe+ form:

√ Web based: This is web-based form, that means this form can’t be download. It will be filled on MCA website online only.

√ Online Information:This form once online information filed will be save there only and can be access in dash board of the Log in ID.

√ Fill details of PAN & TAN:

It is mandatory to mention the details of PAN & TAN in the Incorporation Form Spice+. Link to find out of Area Code to file PAN & TAN are given in Help Kit of SPICE+.

√ Attachment of Documents:In web-based form only promoters have to attach documents pdf files.

√ Download PDF form:After complete filing of information in web-based form. Download PDF file of the form from dashboard.

√ Process after Downloading of PDF:Below given steps have to use for incorporation of company.

STEP – V: Fill details of GST, EPFO, ESIC, BANK Account in AGILE PRO:

After proper filing of SPICE+ form applicant has to move on filling of information in the AGILE PRO form Dashboard Link. All the information which are common in PART-B and AGILE PRO shall be auto fill in AGILE Pro. It is also web based form.

• GST:If Company wants to apply for GST it has to select YES in the form and fill the information in the form.
• EPFO/ ESIC:It is mandatory to apply for ESIC and EPFO.
• However, as per their concerned department company not required to file return till the date applicability of provisions of same on such company.
• Bank Account:It is mandatory to open bank account through this form. Bank account branch shall be assigned according to nearest branch to the Registered office of the Company.

STEP – VI: Fill details of INC-9:

INC-9 shall also be generated web-based and need affixation of Directors/ subscribers on the same. It shall not be generated web-based in one situation when atleast one directors/ subscriber not having DIN and PAN both.

STEP – VII: Download PDF of all the web-based forms-:

After filing of all web-based form i.e.

• Spice+
• Agile Pro
• INC-9

Download PDF of such forms from dash board given link. After downloading of PDF affix DSC on all the forms accordingly.

STEP – VIII: Filing of forms with MCA-:

Once all forms ready with the applicant, upload all four documents as a Linked form on the MCA website and make the payment of the same.

STEP – IX: Certificate of Incorporation-:

The incorporation certificate shall be generated with CIN, PAN & TAN details over it.

Features of SPICe+ form:

• Maximum details of directors are TWENTY (20).
• Maximum THREE (3) directors are allowed for filing application of allotment of DIN while incorporating a Company.
• Affix physical apostilled/ notarized copy of MOA in the Form.
• Affix physical apostilled/ notarized copy of AOA in the Form.
• Applying for PAN / TAN will be compulsory for all fresh incorporation applications filed in the new version of the SPICe form.
• Applying for ESIC/EPFO/ Bank Account will be compulsory for all fresh incorporation applications filed in the new version of the SPICe form.
• The company can apply for GST, IEC also through an AGILE form.
• In case of companies incorporated, with effect from the 26th day of January 2018, with a nominal capital of less than or equal to rupees ten lakhs or in respect of companies not having a share capital whose number of members as stated in the articles of association does not exceed twenty, fee on INC-32 (SPICe) shall not be applicable
• Registration for EPFO and ESIC shall be mandatory for all new companies incorporated w.e.f 15 February 2020 and no EPFO & ESIC registration nos. shall be separately issued by the respective agencies
• Registration for Profession Tax shall also be mandatory for all new companies incorporated in the State of Maharashtra w.e.f 15th February 2020
• All new companies incorporated through SPICe+ (w.e.f 15th February 2020) would also be mandatorily required to apply for opening the company’s Bank account through the AGILE-PRO linked web form.

POST INCORPORATION

Step –I: Receipt of Subscription Money from Foreign Subscriber.

Step –II: Filing of e-form 20A – Declaration of Commencement of Business.

Step – III: Collect FIRC Certificate from the Bank as per FDI Guidelines.

Step IV: Issue a Share Certificate to the subscribers.

Step V: File FCGPR with RBI as per FDI Guidelines.

Notes:

1. If a foreign company is incorporating its subsidiary company in India, then the original name of the holding company as it is maybe allowed with the addition of the word India or the name of any Indian state or city.

Practical Aspects On Incorporation of Foreign Subsidiary Company In India and The Indian Company Law on Names, Notary, Apostillation, and Consularisation

The Indian Companies Act, 2013 (Act) allows the incorporation of Subsidiary Company of Foreign Company in India. The Subsidiary Company of Foreign Company means either controls the composition of the Board of directors or exercises or controls more than half of the total share capital.

INDIAN LAW ON APPLICATION OF NAME OF FOREIGN COMPANY:

• As per Rule 8 of the Companies(Incorporation) Rules, 2014 (“hereinafter referred to as the Rules”) states that if a foreign company is incorporating its subsidiary company in India, then the original name of the holding company as it is maybe allowed with the addition of word India or name of any Indian State or city, if otherwise available:

Provided further that provisions of rule 8 shall apply mutatis mutandis while determining whether a proposed name is too nearly resembling the name of a company or limited liability partnership incorporated outside India.

• The name shall be considered undesirable if the proposed name implies association or connection with an embassy or consulate of a foreign government;
• The proposed name includes the name of any foreign country or any city in a foreign country, the same shall be allowed if the applicant produces any proof of the significance of business relations with such foreign country like a memorandum of understanding with a company of such country:

Provided that the name combining the name of a foreign country with the use of India like India Japan or Japan India shall be allowed if, there is a government to government participation or patronage and no company shall be incorporated using the name of an enemy country.

INFORMATION AND DOCUMENTS REQUIRED FOR INCORPORATION OF FOREIGN SUBSIDIARY COMPANY IN INDIA

FIRST OF ALL, ALL THE DOCUMENTS SIGNED OUTSIDE INDIA WHETHER FOR APPLICATION OF NAME OR FOR INCORPORATION SHALL BE NOTARIZED/APOSTILLED/ CONSUL RAISED DEPENDING ON THE COUNTRY.

> At the time of application of name:

• • INCORPORATION/REGISTRATION CERTIFICATE:

A copy of the incorporation or registration certificate is also required which should be in the English language or should be translated into the English language.

• • TRADEMARK CERTIFICATE:

A copy of Certificate of registered Trademark, if any,

• • NOC:

NOC from the Foreign Company to use a “particular” word or ‘Trademark” in the form of Resolution.

> After the approval of name, the following information will be required:

• •  RESOLUTION:

Please note that the name of authorized representative and no. of shares subscribed should be mentioned in such resolution.

• •  ID PROOF:

The copy of ID Proof of authorized representative.

Please note that such ID proof should be duly notarized/apostilled/ consularised in case such representative is non-resident.

Who can become Authorised Representative?

Any person be it Non-resident or Resident Indian can become Authorised Representative.

• •  MOA:

Copy of Charter (MOA) of Foreign Company

• • RESIDENT DIRECTOR:

Details of atleast one Resident Indian Director should be provided.

• • NOMINEE:

Name of Nominee of the share.

Please note that the name and signature of Nominee will be required in case the Company is going to be incorporated as the WHOLLY-OWNED Subsidiary (100% shareholding by Foreign Company) because as per Indian Companies Act, minimum two shareholders are required.

Practically speaking, the MCA(CRC) raises objection if the Authorised Representative and Subscriber are same person.

> After the above information, the following documents need to be drafted:

• • MAOA:

The MOA and AOA of the company

Please note that in case of Foreign Subsidiary, eMOA and eAOA are not accepted by MCA(CRC) due to their attestation and signing outside India.

• • PAN DECLARATION:

Declaration from the foreign subscribers in respect of not having Indian PAN

• • FORM DIR-2

Form DIR-2 for consent to act as director, to be signed by each director

Note that the DIR-2 signed by the Indian Director need not to be notarized/apostilled/ consularised if it is signing in India.

• •  KYC:

ID and Address proof of the directors who doesn’t posses DIN

Please note that the DIN holders doesn’t need to attach their KYC. The MCA(CRC) accepts Passport/ Voter ID/ Driving License as ID proof and they accept Bank Statement/ Utility bill address proof for individuals who doesn’t possess DIN.

• •  FORM INC-9:

Form INC-9 for declaration by the first subscriber and directors

• • DIGITAL SIGNATURE:

Digital Signature of only one Subscriber is enough for Incorporation of such Company

• • NOC:

NOC from the owner of the property in case if the property is taken on lease for use of registered office of the company;

• • ADDRESS PROOF:

Proof of office address like rent agreement/lease deed along with copy of utility bill like water bill, electricity bill, telephone bill which should not not older than 2 months

INDIAN LAW ON NOTARY, APOSTILLATION AND CONSULARISATION:  

As we have studied above, all the documents signed outside India whether for application of name or for incorporation shall be notarized/apostilled/ consularised depending on the country, the Companies (Incorporation) Rules, 2014 provides the following:

Rule 13(5) classified the Foreign Countries into three categories as enumerated in the table for which attestation of documents is required to be done as per the country of origin.

As per rule 13(5)(a), where subscriber to the memorandum is a foreign national residing outside India, there is a need to attest the documents of proposed subscribers as per the manner indicated below:

INDIAN LAW ON VISA:

The rule 13(5)(c) states that where subscriber to the memorandum is a foreign national residing outside India and visited in India and intended to incorporate a company, in such case, the incorporation shall be allowed if, he/she is having a valid Business Visa.

The proof of such visa along with the arrival stamps shall be required and the same shall be annexed in SPICe form at the time of incorporation.