Company Registration A Worthy Decision For Business Setup

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Generally a subsidiary company is a sister company that is wholly or partially controlled by another company known as parent company. Usually the parent company owns more than 50% of the subsidiary company’s stock. Almost all multinational companies organize their business through formation of subsidiaries. In India too, a multinational company can form subsidiary to boost and expand their business. The detailed process of setting up a subsidiary company in India is mentioned below.Subsidiaries come under the Companies Act of 1956.No prior approval of Government of India is required unless the company deals in certain negative sector. In terms of tax laws, deductions and exemptions it is treated as a domestic company. A subsidiary company is allowed to raise funds through share capital or loans as well and all types of business operations such as manufacturing, marketing, processing etc are permitted its business operation are in accordance with Indian laws. The minimum authorized and paid up amount while incorporating the subsidiary must be 100000 INR. However, there is no upper limit. One can also increase the limit later ...
... on by undergoing a small procedure. The first step in setting up a subsidiary is to apply for the name under which the company is to be registered. A company representative or a legal entity can file an application in the form 1A. The application has to be filed with the Registrar of Companies (ROC). A fee of 500 INR has to be paid along with the application. After this, the name is checked for availability and if available it is allotted to the applicant. The process generally takes around three days. An applicant also has to file charter documents i.e. Memorandum of Association (MOA) and Articles of Association (AOA). MOA states the objectives of the subsidiary and AOA states the financial status, share holding pattern and the list of its first directors. The MOA should be submitted along with a stamp duty of 200 INR while AOA is charged at 0.15% of the share capital value. This process is completed within a time frame of 2-3 days. Generally the following documents are required for incorporating a subsidiary company-

1) Form 1- A declaration executed by one of the directors, chartered accountants of the subsidiary stating that the incorporation is in accordance with all the existing laws. The declaration should be made on a stamp paper of 20 INR.

2) Form 18- A document notifying ROC about the registered office of the subsidiary.

3) Form 29- A written consent by the persons appointed as first directors,

4) Form 32- Names and details of the Directors.

These are the main steps while incorporating a subsidiary in India. The ROC will then verify the credentials and call on a particular date to make corrections to the MOA and AOA documents if necessary. After this process, the certification of incorporation is granted. However, other formalities include setting up of a bank account, applying for Permanent Account Number, filing of tax related documents etc. One must also comply with the legal procedures as stated in the Companies Act 1956 while setting up a subsidiary.

In a nutshell, setting up of a subsidiary in India is a hassle free, fast and efficient process .However, it is advisable to take the help of a legal agent to make sure everything goes on smoothly.

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