Incorporation of a 100% foreign subsidiary company in India under the Companies Act, 1956

Please See Procedure for Incorporation of Public Ltd. Companies and Procedure for Private Limited Companies. Apostil or consularised copy of the Certificate of Registration of Holding company and Certificate of Trade mark registration would be required for proposed name

Following additional points shall be noted:

• No objection Certificate from holding company is required if name of the proposed company contains the similar words. No objection certificate is required to be submitted at the time of application for name availability in the form of Board Resolution
• The Foreign promoter if signing and subscribing to the Memorandum and Articles of Association outside India then he shall sign the same before the Indian Consulate situated in the Indian Embassy. The Indian Consulate shall witness the signature of such foreign promoter after payment of necessary fees. If such Promoter is signing and subscribing in India, then all the documents that he is signing shall be notarized and copy of the passport evidencing his stay in India is required to be produced before the Registrar. Witness to signatures should be made by any person available at the time of execution.
• Compliance under Foreign Exchange Management Act, 1999
  
  
  • If the activity of the company or investment in India requires approval of Government of India under Regulation 1 of Schedule I to the Foreign Exchange Management (Transfer or Issue of security by a person resident outside India) Regulations, 2000, then that needs to be applied immediately after name approval letter.
  • If activity of the Company or investment in India is eligible to cover under Automatic Route under Regulation 2 of Schedule I to the Foreign Exchange Management (Transfer or Issue of security by a person resident outside India) Regulations, 2000, then compliance after incorporation is required to be made.
  • The considerationfor investment by the foreign promoter shall be made by remittance from abroad through normal banking channels or by debit to an account of the investor maintained with an authorized Bank in India in accordance with the regulations made by the Reserve Bank of India under the Foreign Exchange Management Act.
  • For Issue of shares to subscribers to the memorandum, No valuation norms will be applicable and shares can be issued at a face value. For further issue of shares (other than right shares) or for transfer of shares valuation norms under FEMA shall apply and valuation is to be done on the basis of Discounted Free Cash Flow (DCF) Method
  • It has also be ensured whether the company requires an industrial license under the provisions of the Industries (Development & Regulation) Act, 1951 or under the locational policy notified by Government of India under the Industrial Policy of 1991 as amended from time to time. If the same is required, necessary compliance shall be made.
  • An Indian company issuing shares or convertible debentures in accordance with the abovementioned Regulations shall submit to Reserve Bank:
  a) Not later than 30 days from the date of receipt of the amount of consideration, a report indicating: -
  
  (i) Date of receipt of funds and their rupee equivalent
  (ii) Name and address of the authorized dealer through whom the funds have been received
  (iii) Details of the Government approval, if any. KYC report of foreign investor
  
  b) Not later than 30 days from the date of issue of shares, a report in Form FC-GPR together with,
  
  (i) A certificate from the Company Secretary of the company accepting investment form persons resident outside India certifying that
  
  a) That the all the requirements of the Companies Act, 1956 related to the allotment have with complied with.
  
  b) That the terms and conditions of the Government approval, if any, have been complied with.
  
  c) That the Company is eligible to issue shares under these Regulations and
  
  d) The Company has all original certificates issued by Authorised Dealer in India evidencing receipt of amount of consideration in accordance with paragraph 9
  
  (ii) A certificate from Statutory Auditors or Chartered Accountant or Category I Merchant Banker indicating the manner of arriving at the price of the shares issued to the persons resident outside India based on DCF valuation.