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Forming an Indian subsidiary in Delhi requires more than just business intent—it involves adherence to several legal, regulatory, and procedural frameworks. Whether you're a multinational corporation or a startup planning to enter the Indian market, it is crucial to understand the legal landscape for a smooth setup process.
In this blog, we walk you through the major legal requirements and compliance steps involved in establishing a wholly-owned subsidiary in Delhi.
Understanding the Indian Subsidiary Structure
An Indian subsidiary is a company incorporated under the Companies Act, 2013, where a foreign entity holds a majority or 100% of the share capital. It is treated as a domestic company for tax purposes and enjoys all rights and obligations under Indian law.
Key Legal Requirements
Digital Signature Certificate (DSC)
The directors of the proposed company must obtain a Digital Signature Certificate, which is essential for signing online documents filed with the Ministry of Corporate Affairs (MCA).
Director Identification Number (DIN)
At least one director must have a Director Identification Number. DIN can be applied during the incorporation process via the SPICe+ form.
Indian Resident Director
Indian law mandates that one of the directors must be a resident in India—someone who has stayed in India for at least 120 days during the financial year.
Unique Company Name Approval
You must apply for and receive approval for a unique business name through the RUN (Reserve Unique Name) service offered by MCA.
Incorporation through SPICe+ Form
The SPICe+ form is a government-approved single-window application that allows for:
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Company incorporation
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PAN and TAN allotment
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GST registration
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EPFO and ESIC registration
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Professional Tax registration (if applicable in Delhi)
This streamlined process ensures that most statutory registrations are handled at once, reducing time and effort.
Shareholding Structure
Foreign companies can own 100% of the equity in the Indian subsidiary in most sectors under the automatic route. However, for sectors like defence, media, and insurance, prior approval from the government is required.
Additionally:
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Minimum two shareholders are required for a Private Limited Company
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Shareholders can be individuals or corporate entities
Registered Office Requirement
To incorporate in Delhi, the company must have a registered office address within city limits. This can be:
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A commercial office space
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A virtual office (for initial setup)
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A shared coworking space
Ensure the space has valid documentation like rent agreement and utility bills.
Post-Incorporation Legal Compliances
Once the company is formed, the following are mandatory:
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Appointment of statutory auditor within 30 days
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Bank account opening in the company’s name
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Issuance of share certificates to shareholders
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Filing of INC-20A (declaration of commencement of business)
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Maintenance of statutory registers and board resolutions
FEMA and RBI Compliances
If the subsidiary receives foreign investment:
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Intimate RBI by filing FC-GPR form within 30 days of allotting shares
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Report FDI transactions through the Single Master Form (SMF) on the FIRMS portal
Compliance with FEMA (Foreign Exchange Management Act) is crucial to avoid penalties.
Taxation and Accounting Requirements
Indian subsidiaries must comply with:
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Corporate tax filing
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GST registration and monthly filings
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TDS deductions and payments
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Annual ROC filings
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Statutory audits
Role of Professional Advisors
Legal, tax, and compliance experts can help avoid costly mistakes and delays. With more than 60 years of experience,
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Company incorporation services
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RBI and FEMA reporting
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Tax planning and compliance
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Accounting and audit solutions
Conclusion
Setting up an Indian subsidiary in Delhi opens the door to one of the world’s largest markets—but only if done right. Ensuring compliance with all legal and procedural requirements is non-negotiable. From incorporation to post-setup compliance, experienced advisors can make your expansion smooth and risk-free.
FAQs
1. Can a foreign company have 100% ownership in an Indian subsidiary?
Yes, in most sectors, 100% FDI is allowed under the automatic route.
2. Is it mandatory to have a local office in Delhi for registration?
Yes, a registered office address within Delhi is required.
3. How long does it take to incorporate a subsidiary?
Typically, 2 to 4 weeks, depending on documentation and approvals.
4. What is FC-GPR?
It's a form used to report share allotment against foreign investment to the RBI.
