{"id":6005,"date":"2019-09-03T22:13:29","date_gmt":"2019-09-03T16:43:29","guid":{"rendered":"https:\/\/carajput.com\/blog\/?p=6005"},"modified":"2022-07-31T18:20:19","modified_gmt":"2022-07-31T12:50:19","slug":"corporate-and-professional-updates-on-3rd-september-2019","status":"publish","type":"post","link":"https:\/\/carajput.com\/blog\/corporate-and-professional-updates-on-3rd-september-2019\/","title":{"rendered":"Establishment &#038; compliance of foreign entity in India"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Page Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e2a48b104ab\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #000000;color:#000000\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e2a48b104ab\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/carajput.com\/blog\/corporate-and-professional-updates-on-3rd-september-2019\/#BRIEF_INTRODUCTION\" title=\"BRIEF INTRODUCTION\">BRIEF INTRODUCTION<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/carajput.com\/blog\/corporate-and-professional-updates-on-3rd-september-2019\/#WHOLLY_OWNED_SUBSIDIARIES\" title=\"WHOLLY OWNED SUBSIDIARIES\">WHOLLY OWNED SUBSIDIARIES<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/carajput.com\/blog\/corporate-and-professional-updates-on-3rd-september-2019\/#ACQUISITION_OF_SHARES_BY_A_FOREIGN_COMPANY_IN_AN_INDIAN_COMPANY\" title=\"ACQUISITION OF SHARES BY\u00a0A FOREIGN\u00a0COMPANY IN AN INDIAN COMPANY \">ACQUISITION OF SHARES BY\u00a0A FOREIGN\u00a0COMPANY IN AN INDIAN COMPANY <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/carajput.com\/blog\/corporate-and-professional-updates-on-3rd-september-2019\/#METHOD_OF_PAYMENT_OF_CONSIDERATION\" title=\"METHOD OF PAYMENT OF CONSIDERATION\">METHOD OF PAYMENT OF CONSIDERATION<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/carajput.com\/blog\/corporate-and-professional-updates-on-3rd-september-2019\/#VALUATION_OF_SHARES_OF_AN_EXISTING_COMPANY\" title=\"VALUATION OF SHARES OF AN EXISTING COMPANY\">VALUATION OF SHARES OF AN EXISTING COMPANY<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/carajput.com\/blog\/corporate-and-professional-updates-on-3rd-september-2019\/#KINDS_OF_FOREIGN_INVESTMENT\" title=\"KINDS OF FOREIGN INVESTMENT\">KINDS OF FOREIGN INVESTMENT<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/carajput.com\/blog\/corporate-and-professional-updates-on-3rd-september-2019\/#COMPANIES_LIKE_PAYTM_LIKELY_TO_BE_COVERED_IN_E-COMMERCE\" title=\"COMPANIES LIKE PAYTM\u00a0LIKELY TO BE COVERED IN E-COMMERCE\">COMPANIES LIKE PAYTM\u00a0LIKELY TO BE COVERED IN E-COMMERCE<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/carajput.com\/blog\/corporate-and-professional-updates-on-3rd-september-2019\/#WHOLLY-OWNED_SUBSIDIARY_VS_MERGER_IN_INDIA\" title=\"WHOLLY-OWNED SUBSIDIARY VS MERGER IN INDIA\">WHOLLY-OWNED SUBSIDIARY VS MERGER IN INDIA<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/carajput.com\/blog\/corporate-and-professional-updates-on-3rd-september-2019\/#HOW_RAJPUT_JAIN_ASSOCIATES_HELP\" title=\"HOW RAJPUT JAIN &amp; ASSOCIATES, HELP\">HOW RAJPUT JAIN &amp; ASSOCIATES, HELP<\/a><\/li><\/ul><\/nav><\/div>\n\r\n<h3><a href=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2021\/04\/1-38.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone  wp-image-11683\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2021\/04\/1-38.jpg\" alt=\"\" width=\"976\" height=\"515\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2021\/04\/1-38.jpg 720w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2021\/04\/1-38-300x158.jpg 300w\" sizes=\"(max-width: 976px) 100vw, 976px\" \/><\/a><\/h3>\r\n<h3><span class=\"ez-toc-section\" id=\"BRIEF_INTRODUCTION\"><\/span><span style=\"color: #000080;\"><strong>BRIEF INTRODUCTION<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<ul>\r\n<li>In this article,\u00a0we are going to\u00a0elaborate further on the Establishment, Compliance &amp; closing compliances and requirements for Foreign Entity in India.<\/li>\r\n<li>Foreign Company\u00a0in line with\u00a0the businesses\u00a0Act 2013 is defined as any company or body corporate incorporated outside India, which\u00a0features a\u00a0place of business in India whether by itself or through an agent, physically or by electronic medium; and, conducts any\u00a0endeavour\u00a0in India in\u00a0the other\u00a0manner.<\/li>\r\n<li>However,\u00a0there&#8217;s\u00a0a small\u00a0change\u00a0in the\u00a0definition of\u00a0an overseas\u00a0company for\u00a0the aim\u00a0of Merger, i.e., Foreign Company means any company or body corporate incorporated outside India having\u00a0an area\u00a0of business in India or not.<\/li>\r\n<li>India being the fastest growing economy\u00a0in the\u00a0world provides many opportunities to foreign companies to grow and develop their business.<\/li>\r\n<\/ul>\r\n<p>The foreign investments in India are governed by\u00a0the principles\u00a0and policies of FDI, FEMA, RBI\u00a0and firms\u00a0Act 2013.\u00a0so as\u00a0to ascertain\u00a0its business any foreign entity has\u00a0the subsequent\u00a0options:<\/p>\r\n<ul>\r\n<li>Wholly owned\u00a0company<\/li>\r\n<li>Acquisition Of Shares\/Stake in An Indian<\/li>\r\n<li><a href=\"https:\/\/carajput.com\/blog\/joint-venture\/\">Joint Venture<\/a> with an Indian Company<\/li>\r\n<li>Liaison Office<\/li>\r\n<li>Project Office<\/li>\r\n<li>Branch Office<\/li>\r\n<li>Limited Liability Partnerships (<a href=\"https:\/\/www.caindelhiindia.com\/blog\/llp-amendment-bill-2021\/\">LLPs<\/a>)<\/li>\r\n<li>Merger with Indian Company\u00a0<\/li>\r\n<\/ul>\r\n<h3><span class=\"ez-toc-section\" id=\"WHOLLY_OWNED_SUBSIDIARIES\"><\/span><span style=\"color: #000080;\"><strong>WHOLLY OWNED SUBSIDIARIES<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone  wp-image-22737\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2019\/09\/WHOLLY-OWNED-SUBSIDIARIES..png\" alt=\"WHOLLY OWNED SUBSIDIARIES\" width=\"823\" height=\"344\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2019\/09\/WHOLLY-OWNED-SUBSIDIARIES..png 639w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2019\/09\/WHOLLY-OWNED-SUBSIDIARIES.-300x125.png 300w\" sizes=\"(max-width: 823px) 100vw, 823px\" \/><\/p>\r\n<ol>\r\n<li>It\u2019s\u00a0an organization\u00a0in which\u00a0a far-off\u00a0entity makes\u00a0100%\u00a0FDI in India through automatic route.<\/li>\r\n<li>A Wholly Owned\u00a0company\u00a0may be\u00a0formed as a \u201cprivate limited or public limited Company\u201d.<\/li>\r\n<li>Wholly Owned Subsidiary has comparatively more flexibility in conducting business in India as compared to liaison office or branch office. this can be considered because the easiest and also the preferred route by the foreign entities for establishment of their business in India.<\/li>\r\n<li>It is governed by the businesses Act, 2013. Once a corporation has been duly registered and incorporated as an Indian Company they&#8217;re treated as domestic Company and are eligible for all exemptions, deductions benefit as applicable to the other Indian Company<\/li>\r\n<\/ol>\r\n<h3><span class=\"ez-toc-section\" id=\"ACQUISITION_OF_SHARES_BY_A_FOREIGN_COMPANY_IN_AN_INDIAN_COMPANY\"><\/span><span style=\"color: #000080;\"><strong>ACQUISITION OF SHARES BY\u00a0A FOREIGN\u00a0COMPANY IN AN INDIAN COMPANY <\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<ul>\r\n<li>The industry,\u00a0in the\u00a0present case is financial services, which\u00a0is that the\u00a0exception to the sectors where the<a href=\"https:\/\/carajput.com\/blog\/know-about-foreign-direct-investment-in-india\/\"> FDI<\/a> Cap is 100% and therefore the entry route is Automatic.<\/li>\r\n<li>In case of such a proposal for acquisition of shares in an existing Indian company in the financial services sector, the applying of the Securities &amp; Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 is attracted and prior approval of the govt. is required.<\/li>\r\n<li>The above-mentioned activities have been recognized by the Foreign Investment Promotion Board (FIPB), Ministry of Finance.<\/li>\r\n<li>For these acquisitions\u2019 application\u00a0is\u00a0made in Form FC-IL; plain paper applications carrying all relevant details\u00a0are\u00a0accepted and no fee is payable.<\/li>\r\n<li>Indian companies having foreign investment approval through FIPB route don&#8217;t require to any extent further clearance from RBI for receiving inward remittance and issue of shares to the foreign investors.<\/li>\r\n<li>The businesses are required to notify the concerned regional office of the RBI of receipt of inward remittances within 30 days of such receipt and within 30 days of issue of shares to the foreign investors or NRIs.<\/li>\r\n<\/ul>\r\n<p><span style=\"color: #000080;\"><strong><span lang=\"EN-IN\">Procedure Foreign Company in an Indian Company<\/span><\/strong><\/span><\/p>\r\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone  wp-image-22729\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2019\/09\/Procedure-Foreign-Company-in-an-Indian-Company.gif\" alt=\"Procedure Foreign Company in an Indian Company\" width=\"756\" height=\"310\" \/><\/p>\r\n<p>The following procedure is to be followed after investment\u00a0is created\u00a0with Government approval:<\/p>\r\n<ol>\r\n<li><span style=\"color: #000080;\"><strong>On receipt\u00a0of cash\u00a0for investment<\/strong>:<\/span> Within 30 days of receipt\u00a0of cash\u00a0from the foreign investor, the Indian company will\u00a0report back to\u00a0the Regional Office of RBI under whose jurisdiction its Registered Office\u00a0is found, a report containing details such as:<\/li>\r\n<\/ol>\r\n<ul>\r\n<li style=\"list-style-type: none;\">\r\n<ul>\r\n<li>Particulars of the foreign investors, including their name and address<\/li>\r\n<li>Details related to the receipt of funds and their the same be provided in equivalent to Indian rupees.<\/li>\r\n<li>Particulars of the authorized dealer through whom the funds\u00a0are\u00a0channelized, including their name and address.<\/li>\r\n<li>Details in respect of approval obtained from the government, if required.<\/li>\r\n<\/ul>\r\n<\/li>\r\n<\/ul>\r\n<ol start=\"2\">\r\n<li><span style=\"color: #000080;\"><strong>On issue of shares to foreign investor:<\/strong><\/span> Within 30 days from the date of issue of shares, a report in Form FC-GPR\u00a0along with\u00a0the subsequent\u00a0documents should be filed with the Regional Office of RBI:<\/li>\r\n<\/ol>\r\n<ul>\r\n<li style=\"list-style-type: none;\">\r\n<ul>\r\n<li>Certificate from\u00a0the corporate\u00a0Secretary of\u00a0the corporate\u00a0accepting investment from persons resident outside India certifying that:<\/li>\r\n<li>All\u00a0the necessities\u00a0of\u00a0the businesses\u00a0Act, 1956\u00a0are\u00a0complied with;<\/li>\r\n<li>Terms and conditions of\u00a0the govt\u00a0approval, if any,\u00a0are\u00a0complied with;<\/li>\r\n<li>The company has been authorized for issuance of shares under these Regulations; and<\/li>\r\n<li>The company is in receipt of all the original certificates issued by authorised dealers in India, evidencing receipt of amount of consideration;<\/li>\r\n<li>Certificate from Statutory Auditors or\u00a0accountant\u00a0indicating\u00a0the way\u00a0of arriving at\u00a0the worth\u00a0of the shares issued to the persons resident outside India.<\/li>\r\n<\/ul>\r\n<\/li>\r\n<\/ul>\r\n<p>The guidelines in respect of pricing and documentation, in case where <a href=\"https:\/\/carajput.com\/blog\/category\/sebi\/\">SEBI<\/a> guidelines are attracted, shall be in compliance with those specified by RBI from time to time.<\/p>\r\n<p>The investee company being\u00a0in the\u00a0financial sector, the FDI policy and FEMA regulations in terms of entry route, sectoral caps, conditionalities (such as minimum capitalization, etc.), reporting requirements, documentation etc., are to be complied with.<\/p>\r\n<h3><span class=\"ez-toc-section\" id=\"METHOD_OF_PAYMENT_OF_CONSIDERATION\"><\/span><span style=\"color: #000080;\"><strong>METHOD OF PAYMENT OF CONSIDERATION<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<ul>\r\n<li>The sale consideration in respect of the shares purchased by an individual resident outside India shall be remitted to India through normal banking channels, by way of debit to the NRE\/FCNR account maintained by the person concerned, with an authorised dealer\/bank, or \u00a0by debit to non-interest bearing Escrow account (in Indian Rupees) maintained in India with the AD bank in accordance with interchange Management (Deposit) Regulations, 2000.<\/li>\r\n<li>The consideration amount may additionally be paid out of the dividend payable by Indian investee company, in which the said non-resident holds control, provided the correct to receive dividend is established and also the dividend amount has been credited to specially designated non-interest bearing rupee account for acquisition of shares on the ground of securities market. in case the client could be a Foreign Institutional Investor (FII), payment should be made by debit to its Special Non-Resident Rupee Account.<\/li>\r\n<\/ul>\r\n<h3><span class=\"ez-toc-section\" id=\"VALUATION_OF_SHARES_OF_AN_EXISTING_COMPANY\"><\/span><span style=\"color: #000080;\"><strong>VALUATION OF SHARES OF AN EXISTING COMPANY<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<p>The valuation of the shares to be transferred, to a non-resident by a resident, shall be determined as under:<\/p>\r\n<ul>\r\n<li>In case\u00a0of listed shares, at a price which\u00a0isn&#8217;t\u00a0but\u00a0the worth\u00a0at which a preferential allotment of shares would be made under SEBI guidelines.<\/li>\r\n<li>If it is the unlisted shares at a price which isn&#8217;t but the fair valuation as per any internationally accepted pricing methodology on arm\u2019s length basis to be determined by a SEBI registered Category-I- Merchant Banker\/Chartered Accountant.<\/li>\r\n<\/ul>\r\n<h3><span class=\"ez-toc-section\" id=\"KINDS_OF_FOREIGN_INVESTMENT\"><\/span><span style=\"color: #000080;\"><strong>KINDS OF FOREIGN INVESTMENT<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<ul>\r\n<li><span style=\"color: #000080;\"><strong>STOCK\/SHARES<\/strong><\/span><\/li>\r\n<\/ul>\r\n<p style=\"padding-left: 40px;\">Foreign investment through stock is allowed by foreign investors and is treated as foreign direct investment. However, the preferred stock should be fully and mandatorily convertible into equity shares within a specified time to be reckoned as a part of share capital under FDI. Investment in other sorts of preferred stock requires to go with the External Commercial Borrowings (ECB) norms.<\/p>\r\n<ul>\r\n<li><span style=\"color: #000080;\"><strong>DEBENTURES<\/strong><\/span><\/li>\r\n<\/ul>\r\n<p style=\"padding-left: 40px;\">Debentures which are fully and mandatorily convertible into equity within a specified time would\u00a0even be\u00a0reckoned as\u00a0a part of\u00a0share capital under the FDI Policy.<\/p>\r\n<ul>\r\n<li><span style=\"color: #000080;\"><strong>RIGHTS SHARES<\/strong><\/span><\/li>\r\n<\/ul>\r\n<p style=\"padding-left: 40px;\"><span style=\"color: #000000;\">FEMA has no restrictions for investment in Rights shares issued at\u00a0a reduction\u00a0by an Indian company, provided the rights shares so issued are being offered at\u00a0the identical\u00a0price to residents and non-residents. The offer for right issue shall be made to a Non-resident on the following basis &#8211;<\/span><\/p>\r\n<ul>\r\n<li style=\"list-style-type: none;\">\r\n<ul>\r\n<li>In the\u00a0case of shares of\u00a0a corporation\u00a0listed on a recognized\u00a0stock market\u00a0in India, at a price as determined by the company; and<\/li>\r\n<li>if the case of shares of a corporation unlisted on a recognized stock market in India, at a price which isn&#8217;t but the worth at which the offer on right basis is formed to resident shareholders.<\/li>\r\n<\/ul>\r\n<\/li>\r\n<\/ul>\r\n<h3><span class=\"ez-toc-section\" id=\"COMPANIES_LIKE_PAYTM_LIKELY_TO_BE_COVERED_IN_E-COMMERCE\"><\/span><span style=\"color: #000080;\"><strong>COMPANIES LIKE PAYTM\u00a0LIKELY TO BE COVERED IN E-COMMERCE<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<ul>\r\n<li>RBI Press release issued on 29 March 2016 allowed 100% (One hundred per cent) FDI under the automated route in \u201cmarketplace model of ecommerce\u201d.<\/li>\r\n<li>The \u201cmarketplace model\u201d has been defined as a model where the ecommerce entity provides an information technology platform on a digital and system to act as a facilitator between buyers and sellers.<\/li>\r\n<li>It&#8217;s also been clarified that FDI isn&#8217;t permitted in \u201cinventory-based model of ecommerce\u201d. The \u201cinventory-based model\u201d has been defined as a model where the e-commerce entity owns the inventory of products and services which are sold to the consumers directly.<\/li>\r\n<\/ul>\r\n<h3><span class=\"ez-toc-section\" id=\"WHOLLY-OWNED_SUBSIDIARY_VS_MERGER_IN_INDIA\"><\/span><span style=\"color: #000080;\"><strong>WHOLLY-OWNED SUBSIDIARY VS MERGER IN INDIA<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-22731\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2019\/09\/WHOLLY-OWNED-SUBSIDIARY-VS-MERGER-IN-INDIA.png\" alt=\"WHOLLY-OWNED SUBSIDIARY VS MERGER IN INDIA\" width=\"1440\" height=\"810\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2019\/09\/WHOLLY-OWNED-SUBSIDIARY-VS-MERGER-IN-INDIA.png 1440w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2019\/09\/WHOLLY-OWNED-SUBSIDIARY-VS-MERGER-IN-INDIA-300x169.png 300w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2019\/09\/WHOLLY-OWNED-SUBSIDIARY-VS-MERGER-IN-INDIA-1024x576.png 1024w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2019\/09\/WHOLLY-OWNED-SUBSIDIARY-VS-MERGER-IN-INDIA-768x432.png 768w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2019\/09\/WHOLLY-OWNED-SUBSIDIARY-VS-MERGER-IN-INDIA-800x450.png 800w\" sizes=\"(max-width: 1440px) 100vw, 1440px\" \/><\/p>\r\n<p>A wholly-owned\u00a0subsidiary\u00a0means an entity\u00a0during which\u00a0the whole\u00a0share capital is owned by\u00a0a far-off\u00a0company called as a parent or\u00a0company.\u00a0the businesses\u00a0Act, 2013 doesn\u2019t define the term wholly-owned subsidiary properly, but various provisions\u00a0associated with\u00a0a far-off\u00a0company and its registration provide a background of what\u00a0this kind\u00a0of company registration means.<\/p>\r\n<p>There are many modes\u00a0during which\u00a0a wholly-owned\u00a0subsidiary\u00a0will be\u00a0set-up in India. These are as follows-<\/p>\r\n<ul>\r\n<li>Private Company<\/li>\r\n<li>Company limited by share<\/li>\r\n<li>Unlimited Liability Company<\/li>\r\n<li>Company limited by guarantee<\/li>\r\n<\/ul>\r\n<p><span style=\"color: #000000;\">A merger in India\u00a0could be a\u00a0tool which companies uses for expanding their business operations.\u00a0this is often\u00a0usually\u00a0concerned\u00a0by\u00a0an organization\u00a0for increasing the profitability level for long terms. <\/span><\/p>\r\n<p><span style=\"color: #000000;\">In commercial terms, a merger in India means\u00a0to mix\u00a0two or more industries or firms together. Simply, it means the absorption by some other entity and thereby lose individual identity.\u00a0the businesses\u00a0Act doesn\u2019t provide a legal definition of merger.<\/span><\/p>\r\n<p><span style=\"color: #000000;\"> However, in India, the schemes of merger are governed by various provisions i.e., Section 390 to Section 394A, Section 395, Section 396 and 396A.<\/span><br \/><br \/><span style=\"color: #000080;\"><strong>REGISTRATION OF A WHOLLY-OWNED SUBSIDARY\u00a0<\/strong><\/span><\/p>\r\n<p><span style=\"color: #ff9900;\"><strong>Registration of a Wholly-owned subsidiary:-<\/strong><\/span> Following steps are involved in registering a wholly-owned\u00a0subsidiary\u00a0of\u00a0a far-off\u00a0company in India:<\/p>\r\n<ol>\r\n<li><span style=\"color: #ff9900;\"><strong>Applying for Digital Signature Certificate (DSC):<\/strong> <\/span>The Indian\u00a0subsidiary\u00a0is required\u00a0to use\u00a0for a digital signature for all\u00a0the administrators.\u00a0the shape\u00a0for the DSC is to be attested by a practicing\u00a0comptroller\u00a0or\u00a0an organization\u00a0Secretary in India.<\/li>\r\n<li>The applicant company is required to file Form 1A with the Registrar of Companies (ROC) for the incorporation of foreign company and naming the corporate.<\/li>\r\n<li>A replacement approval must be filed by the applicant that has to be attested by an accountant or a corporation Secretary. Once the name is approved, the following step for incorporation is to be taken.<\/li>\r\n<li><span style=\"color: #ff9900;\"><strong>Applying for a Director\u00a0positive identification\u00a0(DIN):<\/strong> <\/span>Apply for a DIN through Form DIN-1 by providing\u00a0the subsequent\u00a0documents:<\/li>\r\n<\/ol>\r\n<ul>\r\n<li style=\"list-style-type: none;\">\r\n<ul>\r\n<li>Passport<\/li>\r\n<li>Two passport size photographs<\/li>\r\n<li>Affidavit\u00a0In the\u00a0format as prescribed by the statutes<\/li>\r\n<li>Present occupation or business of\u00a0the administrators\u00a0of\u00a0the corporate<\/li>\r\n<li>Educational qualification of\u00a0the administrators<\/li>\r\n<li>Documents posted from\u00a0the house\u00a0country,\u00a0in case\u00a0the director is from\u00a0a distant\u00a0country<\/li>\r\n<li>Form DIN-1 must be attested properly by an organization Secretary or controller practicing in India.<\/li>\r\n<\/ul>\r\n<\/li>\r\n<\/ul>\r\n<ol start=\"4\">\r\n<li><span style=\"color: #ff9900;\"><strong>Registering the wholly-owned company:<\/strong><\/span>\u00a0the corporate\u00a0to be incorporated must submit all\u00a0the specified\u00a0documents\u00a0together with\u00a0the Memorandum of Associations (MOA) and Articles of Associations (AOA). The Memorandum of Association of the proposed company must be stamped properly by paying the stamp fees which is 15% of the authorized capital of\u00a0the corporate\u00a0to be incorporated.<\/li>\r\n<\/ol>\r\n<p style=\"padding-left: 40px;\">Once the\u00a0stamp tax\u00a0moreover\u00a0as ROC fees is paid, the Registrar thoroughly verifies the filed documents.\u00a0the subsequent\u00a0are to be approved by the ROC-<\/p>\r\n<ul>\r\n<li style=\"list-style-type: none;\">\r\n<ul>\r\n<li>Form DIR-12\u00a0that has to\u00a0be approved through\u00a0an easy\u00a0procedure.<\/li>\r\n<li>ROC Form INC-7 must be verified in a very detailed manner.<\/li>\r\n<li>Form INC-22 must be approved through straight process\u00a0in addition.<\/li>\r\n<li>If in any case the Registrar of Companies proposes any changes to be made\u00a0In the\u00a0application,\u00a0the corporate\u00a0is required\u00a0to try to\u00a0the identical\u00a0accordingly.<\/li>\r\n<li>Once the Registrar is satisfied with\u00a0the applying, an Incorporation or Registration Certificate\u00a0is distributed\u00a0to the applicant through email.<\/li>\r\n<\/ul>\r\n<\/li>\r\n<\/ul>\r\n<h3><span class=\"ez-toc-section\" id=\"HOW_RAJPUT_JAIN_ASSOCIATES_HELP\"><\/span><span style=\"color: #000080;\"><strong>HOW RAJPUT JAIN &amp; ASSOCIATES, HELP<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<p>We at RJA, with our team of professionals &amp; experts, can help the foreign entities in business registration in India. we are going to make sure of all the compliances related work for the businesses both online and offline. better planning can make the complete process hassle free and smooth. to understand more, please visit www.carajput.com. or call us +91-9-555-555-480<\/p>\r\n<p>Know more about the relevant blogs:<\/p>\r\n<ul>\r\n<li><em><a href=\"https:\/\/carajput.com\/blog\/procedures-for-conversion-of-partnership-firm-to-private-company\/\">Procedures for the conversion of partnership firm into Private limited company<\/a><\/em><\/li>\r\n<li><em><a href=\"https:\/\/carajput.com\/blog\/conversion-of-llp-into-company-limited-by-shares\/\">Conversion of LLP into Company Limited by Shares<\/a><\/em><\/li>\r\n<li><em><a href=\"https:\/\/carajput.com\/blog\/key-takeaways-on-conversion-of-partnership-firm-into-llp\/\">Key takeaway on the conversion of LLP\u00a0 \u00a0 <\/a><\/em><\/li>\r\n<li><em><a href=\"https:\/\/carajput.com\/blog\/limited-liability-partnership-llps-requirements-at-the-time-of-incorporation\/\">LLP Incorporation and Annual Compliances<\/a><\/em><\/li>\r\n<li><em><a href=\"https:\/\/carajput.com\/blog\/major-compliances-due-date-of-annual-filings-of-every-limited-liability-partnerships-llps-for-the-year-2017-18\/\">Post-Incorporation Compliances Filling of LLP<\/a><\/em><\/li>\r\n<li><a href=\"https:\/\/carajput.com\/learn\/filing-of-director-kyc-dir-filing-of-director-kyc-dir3-kyc.html\">Filing of Director KYC DIR-3<\/a><\/li>\r\n<li><a href=\"https:\/\/carajput.com\/blog\/significant-changes-introduced-in-foreign-director-investment-policy\/\">significant-changes-introduced-in-foreign-director-investment-policy<\/a><\/li>\r\n<\/ul>\r\n\r\n\r\n","protected":false},"excerpt":{"rendered":"<p>BRIEF INTRODUCTION In this article,\u00a0we are going to\u00a0elaborate further on the Establishment, Compliance &amp; closing compliances and requirements for Foreign Entity in India. Foreign Company\u00a0in line with\u00a0the businesses\u00a0Act 2013 is defined as any company or body corporate incorporated outside India, which\u00a0features a\u00a0place of business in India whether by itself or through an agent, physically or &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[258],"tags":[9971],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/6005"}],"collection":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/comments?post=6005"}],"version-history":[{"count":5,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/6005\/revisions"}],"predecessor-version":[{"id":6022,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/6005\/revisions\/6022"}],"wp:attachment":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/media?parent=6005"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/categories?post=6005"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/tags?post=6005"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}