Process Incorporation of Foreign Subsidiary / WOS

- February 03, 2018

Article Series- 313

In this Editorial the author shall deliberate the Provisions of Companies Act, 2013 as on Ist February, 2018 in respect of Incorporation of “Subsidiary of a Company Incorporated Outside India or Wholly Owned Subsidiary (WOS) of a Company incorporated outside India. Author shall discuss followings (i) Provisions of the Act (ii) Step Wise Process of Incorporation of Company (iii) FAQ’s on Incorporation of Company. (iv) clarity on Notary or Apostil of Documents. This Editorial includes the “RUN” “SPICE”.

incorporation of company

Whenever we incorporate 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 information/ Documents required from foreign Company? (ii) Whether presence of authorized representative of foreign Company mandatory in India at the time of signing of documents. (iii) What are the provisions in respect of Notary / Appostille etc. (iv) What ID Proofs / Identity proof of foreign subscribers required by the Company etc. etc.

Many more questions came into thoughts while incorporation of subsidiary of foreign subsidiary. In this editorial author shall try to clarify all such doubts / queries in practical approach.

process of incorporation

STEP – I: Apply for Name Approval:

Before application for name approval, foreign Company have to choose the name on basis of followings:

a) In case of Subsidiary or WOS, foreign Company can use coin word of its name as coin word for Incorporation of Company in India to take the Benefit of Its goodwill in foreign County.

b) [1]Foreign Company can apply the same name (name in foreign country) in India by using word “India” in its name.

c) If foreign Company having any registered Trade Mark then it can use such trademark for Incorporation of Company in India.

d) Any other name as decided by the Foreign Company.

i. While selecting the name thought came into mind what are the documents/ information required for application of Name by foreign Company?

In case of Foreign Company using Its “Coin” word or “Trademark” following Documents / information required:

· NOC from the Foreign Company to use the ‘Coin’ word or ‘Trademark” in the form of Resolution.

· Apostilled copy of Charter of Foreign Company (translated in English language).

· Such resolution shall be apostille in foreign Country.

· In case of use of Trademark – copy of trade mark registration documents.

STEP – Process of Name Approval

A. Login on MCA Website

Applicant have to login into their account on MCA Website. (Pro-existing users can use earlier account or new users have to create a new account.)

After Login use have to click on the icon “RUN” in MCA Service. An online form shall be open. Applicants have to fill the information online. (This form can’t be download)

Note* since 26^th January, 2018 e-form INC-1 has been omitted from the Companies Act, 2013.

B. Details required to be mentioned in online form:

(i) Entity type (i.e. Normal Company, Section 8 Company etc.)

(ii) Proposed name (Auto Check Facility)

(iii) Comment (Mention Objects of the proposed Company and any other relevant information Like Trade Mark etc.)

C. Choose File:

This option is available to upload the PDF documents. Like:

i. Apostille copy of Resolution of Foreign Company

ii. NOC, if Required

iii. Trade Mark resignation Documents, if required.

D. Submission of Form on MCA Website:

After completion of above steps user shall submit the Form with MCA website.

E. Payment of Fees:

There is no option of pay later challan in RUN. Applicant has to pay fees immediately after submission of form. After payment challan shall be generated.

I. Validity of Reserved Name:

Reserved name shall be valid for 20 days from the date of approval of Name.

feature - RUN

a. DSC & DIN not required for filing of RUN form for reservation of Name. Only account of MCA portal is mandatory.

b. No Resubmission of application is allowed in case of reservation of Name. The application either Approve or Reject.

c. Reserved name shall be valid for 20 days in case of allotment of name for New Company.

d. Only one Name can be mentioned in RUN form. Earlier INC-1 allowed 6 names according to the preference.

e. As per Register office Fees Rules, Fees shall be Rs. 1,000/-

f. No, there is no need to mention the name or number of proposed Directors in RUN.

NOTE: * Approval of Name through “RUN” is an optional way. Companies can also directly apply for the Name in SPICE form.

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;

_ÑMemorandum of Association of Company (Physical copy of MOA shall be prepare; e-MOA (INC-33) can’tbe prepared).

_ÑArticle of Association of Company (Physical copy of AOA shall be prepare; e-AOA (INC-34)can’tbe prepared).

_ÑINC-9 Affidavit / declaration by first subscriber(s) and director(s) (Duly apostille or notarized in country of origin).

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

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

Ñ NOC from the owner of the property.

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

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

Ñ 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)

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

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

i. Why foreign Company can’t use e-MOA & e-AOA for incorporation of Subsidiary or WOS in India?

Foreign Company can’t use e-MOA & AOA, because as per Rule 13(5) Company (Incorporation) Rules, 2014 MOA & AOA signed by person resident outside India should be appostille or notarized before the notary public of country of his origin.

ii. Whether ID proofs of foreign subscribers required being apostille & Notarized by pubic notary from the country of origin?

ID proof of Authorized representative of foreign Company / nominee of foreign company required to be apostille in the country of origin, if such person is not citizen of India.

iii. How many Digital Signatures are required in case of incorporation of Subsidiary/ WOS of foreign Company?

Only one Digital Signature is enough. Because DSC shall be affix only on SPICE “INC-32” form. No need to affix DSC on subscriber sheet of MOA / AOA as physical MOA / AOA used for Incorporation of Company.

iv. In which situations documents of foreign subscribers not required to be Apostilled?

As per Rule 13(5) if foreign subscriber is present in India on “Business Visa” then documents are not required to be apostille.

v. If foreign subscriber present in India on VISA other than Business Visa and signed the documents in India, whether such documents are required apostille or notarized in the country of origin?

As the foreign subscriber is present in India and signed the documents in India. However, in absence of Business Visa his documents are mandatorily required to be apostille and notarized in the country of origin.

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” INC-32.

Features of SPICe (inc-32) 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.

· Name of Company can apply the Name also in this form.

· 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.

· 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

STEP – VI: Submission of INC-32,33,34 on MCA-:

Once Spice forms ready with the applicant, upload form on MCA website and make the payment of the same.

STEP – VII: Certificate of Incorporation-:

Incorporation certificate shall be generating with CIN, PAN & TAN.

POST incorporation

Step –I: Open Bank Account to receive Subscription Money.

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

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

Step IV: Issue Share Certificate to the subscribers.

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

Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION.

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