Introduction

An Indian Subsidiary company is a company that is incorporated by the foreign nationals or foreign corporation (parent company) with the majority of shareholding in such a company. One of the basic requirements of Indian Subsidiary company registration is having 2 directors- one is a foreign national and the other is a resident of India. In this blog, we will discuss the requirement of an Indian resident director in an Indian Subsidiary company.

Who can be appointed as Indian director in an Indian Subsidiary?

A person can be appointed as an Indian Director when:

He is a resident of India or stayed in India for a period of 182 days.
He should have attained the age of majority.
He should not be disqualified by law.
He should not be convicted of any crime.

What is an Indian Subsidiary Company?

An Indian subsidiary is a business that has its interests owned or controlled by another company. The relationship between the holding company and Indian Subsidiary Company can be determined using the preference share capital and paid-up equity share capital of the subsidiary company. It may be a wholly or partially owned parent company.

India is rapidly growing to become one of the most favored business destinations worldwide. Offering opportunities for investment, encouraging international businesses to engage on domestic projects, and setting up pro-business regulations are just a few measures India is taking to promote itself as a business-friendly nation. India allows foreign companies to set up subsidiaries and take advantage of its friendly laws and regulations.

Requirement of resident Indian to be a director

The requirement for appointing a resident Indian to a director in an India Subsidiary Company are as follows:

The requirement of Indian Director is intended to increase the efficiency of the company in complying with local statutes and processes by assuring that a person is familiar with India. The continuance of one director would facilitate quick fulfillment of legislative actions.

Moreover, it would improve and simplify the processes for getting a Digital Signature Certificate (DSC), filing taxes, submitting annual company filings with the Registrar of Companies/Ministry of Corporate Affairs, and submitting Goods and Service Tax (“GST”) Returns.

The authorized representatives or employees of the companies are in charge of managing the day-to-day operations of such subsidiary companies.

However, the requirement of manual signature on some of the filing under the Act and other regulations, like annual returns can be satisfied without a physical or DSC signature.

Roles and responsibility of Indian director

The following are the roles and responsibilities of Indian director:

The Company's Resident Director will have the same level of responsibility as the Normal Director.
The Resident Director will be appointed to follow the law and regulation
The Indian Director will be responsible for duly filing of GST return and other compliances.
A resident director will attend all necessary board meetings for the company.
The approval or disapproval of circulars and other resolutions will be determined by individual.

How to register a Subsidiary Company?

The same procedure is followed when establishing a subsidiary company as it is when establishing a Private Limited Company. The company must be aware of the steps that the authority needs to incorporate a company. The Indian Subsidiary Company should be incorporated with the Registrar of Companies.

Collect all the necessary documents required in the process of incorporation.
Choosing a name for the company and registering the name.
In addition, all directors and shareholders should apply for DSCs and DINs.
Create the required legal documents, such as the MOA and AOA.
Further, filing for incorporation with the Registrar of Companies using the Form SPICe+.

Documents required for Subsidiary Company of an Indian Parent Company

The registration process of any company can be completed easily when the directors or parent company (in the case of Subsidiary Company registration) provide the documents required for company registration in India. The documents are as follows:

Photograph of all the Directors
PAN Card of all the Directors
ID Proof of all the Directors (Driving License/Passport/Voter ID)
Electricity Bill or any other utility bill for the address proof of the Registered Office
Self Attested Residential Address Proof of all the partners (Electricity Bill/Latest Bank Statement/Mobile Bill) (not older than 2 months)

Conclusion

The directors of Indian Private Limited Companies that are subsidiaries of foreign parent companies are mandated to appoint a director who is resident of India and foreign directors. Usually, these directors of the parent company severe as CEOs and CFOs. Such directors rarely fly to India because they work full-time for overseas parent companies. Foreign directors could not be able to stay in India for long in a year if any situation arises. As a result, the foreign directors are not able to carry out many duties that an Indian director can do as he/she is present in India.