India is one of the largest democracies and one of the most potential growing economies in the world
with more than 1.3 billion inhabitants. International companies therefore have a huge interest in
exploiting the emerging opportunities in India and in entering the rapidly growing market. In this
paper, we examine how a foreign firm / foreign national can launch an operation in India and/or invest
into companies in India and the regulatory framework associated with this. Under Section 2(42) of the
Corporate Act, 2013, a foreign company is defined as an entity that is formed, either by itself or via an
agent physically or electronically outside a business office in India, and that is engaged in a business
in any other way. A foreign corporation in which a company that is formed in Indian is a subsidiary of
the Indian business, whether equity or preferences, not less than 51 percent of the paid-up share
capital. The method for incorporating a foreign subsidiary is explained in this blog.
In Section 2(87) of the Companies Act 2013, the subsidiaries are defined as a business in which the
holding undertaking controls or controls over half of the share capital by itself or in conjunction with
one or more subsidiaries of the board of directors. A wholly-owned subsidiary refers essentially to a
firm in which the parent company holds 100% of its shares.
In order to facilitate the creation of firms SPICe+ FORM (Simplified Proforma electronically plus)
has been introduced and notified by the Ministry of Corporate Affairs (MCA) on 18 February 2020.
Three federal government departments and one state government provide over 10 services
(Maharashtra). The previous SPICe form has been replaced with the SPICE+ form, which
substantially simplifies the registration of corporations.
The SPICe+ form consists of two parts: The following
Part A – Name for new enterprises reservation.
Part B- All additional services necessary for the company's formation.
o Company Registration.
o Allotment of Director Identification Number (DIN).
o Issuing of PAN Card.
o Issuance of TAN.
o Issuance of EPFO registration.
o Issuance of ESIC registration.
o Opening of Bank account for the Company; and.
o Profession Tax registration (only for Maharashtra).
The rules which should be followed for the establishment of an enterprise are laid forth in section 7 of
the Companies Law, 2013 and the Companies Rules (Incorporation) 2014. Rule 38 of the Rules of
Procedure, 2014 discusses the SPICe+ form and the procedure for incorporating a firm.
OBTAINING DIGITAL SIGNATURE CERTIFICATE (DSC)
For a person who desires to be director of a firm, a digital signature certificate is essential. DSC is a
digital key that the certification authority issues. For reports, applications utilising DSC alone, the
Ministry of Corporate Affairs has made them mandatory. DSC can be acquired by the conventional
technique or by the biometric method i.e., in two different methods. In the conventional way, the
applicant must mail to the certifying authority all papers suitably notarized together with the
necessary fee. DSC will be issued by the certifying authority to the requester when the papers
supplied are satisfied.
Documents required for DSC is as follows:
Identity proof– PAN card / passport / driving license or any other signature Government ID if
the applicant is an indigenous native. Certified copy of a Foreign Nationals
Address Proof– Copy, or other utility bill not older than 3 months if the applicant is an Indian
national of the Aadhar Card/Voter ID Card/Driving license Certified copy of a Foreign
Nationals Passport/VISA/Resident Permit.
Fully attested Copy– Applicants are certified to be an Indian national. Copy of the ID Card is
acceptable. If it is a foreign national, the embassy of the foreign national should confirm it or
the Native country should apostatize it.
A passport size photo is also required for the same.
APPROVAL OF THE NAME OF THE COMPANY
Approval of the name by the Minister of Corporate Affairs is the next step towards the formation of
the firm. Previous name consent has been submitted to MCA website on the R.U.N form (Reserve
Unique Name). Now only the name of an existing business is changed by using the RUN form. The
SPICe+ Form Part A may be requested separately to book a name for a new business and may be
requested at the same time.
The candidate who would want to join a foreign company must mention in the SPICe+ Form the
Type of company
Class of company
Category of company
Industrial activity of the Company
Description of Industrial activity
Accordingly, the name of the holding company may be used, with addition of the term India or the
name of any Indian state or town, pursuant to Article4(2) and (3) of the Companies Act 2015 and read
under rule 8 of the Companies Incorporation Rules. If the name of a foreign country is the same,
following confirmation of commercial links such as a Memorandum of Understanding, the same shall
be permitted. The trademark may be used for the same if the foreign firm holds a trademark for the
same. The candidate must ensure that no trademark infringement has occurred.
INCORPORATION OF FOREIGN SUBSIDIARY
The incorporated firm is included in Part B of the SPICe+ form. Only the incorporation procedure will
begin once Part A has been concluded. The form for SPICe+ comprises different columns necessary
for the incorporation of the firm to be filled correctly.
The applicant must fill up the data in an electronic form and submit necessary corporate papers
exclusively using SPICE+ form. It contains different data such as the registered office address and the
company's financial structure.
ALLOTMENT OF A (IDENTIFICATION NUMBER OF DIRECTOR DIN)
DIN is a unique 8 digit identifier number for a person who wishes to become a business director.
Anyone wishing to become the Director of a new firm should apply for a SPICe+ application form
and fill it out. Only the DIN individual can serve as the company's director.
ISSUANCE IF PAN
PAN Card Permanent Account Number (PAN) is a unique ten-digit number issued by the income tax
department. At the moment the company is incorporated, it is obligatory to apply for a PAN Card.
ISSUANCE OF TAN
The unique ten-digit number provided by the income department tax is tax withdrawal and collection
accounts (TAN). Tax number.
Documents required for SPICe+
Memorandum of Association which is duly apostilled or notarized in a foreign nation;
Articles of Association which is duly apostilled or notarized in a foreign nation;
Declaration by the first Director(s) and Subscriber(s) which duly apostilled or notarized in a
Digital Signature with only one subscriber;
NOC from the owner of the company;
DIR-2 declaration from directors along with proof of Identity;
Proof of office address;
Copy of utility bills which should not be older than two months;
A resolution passed by the promoter company;
Copy of body resolution of incorporation of foreign body and resolution of passed by the
Proof of identity and residential address of subscribers;
Proof of identity and residential address of nominees.
Pursuant to the Rules on the Registration of Goods and Services (GSTIN), Employee State Insurance
Corporation (ESIC), Employees Provident Fund Organisation (EPFO) and Professional Tax Registry
and Opening Bank Accounts (ASTIN) registration, AGILE-PRO is needed under the Rules of the
Corporation. For the creation of a new business, it is required to complete the Form for AGILE-Pro
Documents required for Agile-Pro
Proof of Principal place of business.
Proof of appointment of authorized signatory for GSTIN.
Proof of identity of authorized signatory for opening a bank account.
Proof of address of authorized signatory for opening a bank account.
Specimen signature of authorized signatory of EPFO.
REGISTRATION OF THE EPFO
Registration of EPFO workers is mandatory for all organizations with over 20 employees. At the time
of pension, EPF is an advantage that the company provides the employee. The Employee Funds and
Miscellaneous Provisions Act (1952) shall apply to EPF. For registration of the EPFO together with
the company's establishment, the SPICe+ form became obligatory.
REGISTRATION OF THE ESIC
The ESIC is an autonomous institution within the Ministry of Employment and Labor. This
programme offers the employer with medical and financial advantages. The State Insurance Act of the
employees of 1948 governs the ESI. With the moment of incorporation itself, the form SPICe+ made
it obligatory for applicants to register at ESIC.
OPENING THE COMPANY'S BANK ACCOUNT
At the moment of establishment, companies must create a bank account. The AGILE-Pro was
integrated with just ICICI and Punjab National Bank.
FILL IN INC-9 DETAILS
INC-9 is a statement made by the Director at the time of incorporation, and it is filed in conjunction
with the SPICe+ Form. The director's affidavit with INC-9 is also submitted.
FORMS AND CORPORATION CERTIFICATE UPLOAD
You must download all forms in PDF format and attach DSC. If DSC is attached, all forms on the
MCA website should be uploaded. The forms are checked by MCA after they are posted. The
certificate of incorporation should be issued after inspection. The registrar shall issue a certificate in
Form INC 11 of the Incorporation.
India is regarded a profitable commercial market, and many international firms seek a promising
future in India. India also offers a favorable business climate and, before incorporating a foreign
subsidiary in India, it is equally necessary to grasp the regulatory and procedural framework. The
procedure of incorporating a foreign firm has been greatly facilitated by easy business initiative. If an
external firm follows the steps referred to in the blog, it can establish a completely owned subsidiary
in India. The pre and post registration of the foreign subsidiary involves a lot of legal compliances for
which you can approach MYADVO. MYADVO has 10000 plus legal advisers across India having
expertise in the same.