There are many entry modes by which a foreign company can establish an entity in India. The choice of business form entirely depends upon the end goals to be achieved.
Two of the ways in which a foreign company may carry on business in India are by registering a branch office and by incorporating a limited liability company in India.
Companies incorporated outside India and engaged in manufacturing or trading activities are allowed to setup Branch Offices with specific approval of the RBI. Normally, the Branch Office should be engaged in the activity of the Parent Company.
The assets of the parent company are can be utilized to fulfill the liabilities of the Branch office.
The entire expenses of the BO in India will be met either out of the funds received from Head Office through normal banking channels or through income generated by it in India.
A subsidiary company is a company, whose controlling stake is held by another entity, i.e. the holding company. In India, a Subsidiary is an incorporated entity formed and registered under the Companies Act, 2013. It is a distinct legal entity, apart from its shareholders and Parent Company.
The liability of the Parent company is limited to the extent of its shareholding in the subsidiary. The assets of the foreign company are not subject to any attachments. All income arising out of its business activities.
Our team of company secretaries and Chartered Accountants are experienced to understand nuisances of forming a branch office or subsidiary in India for an overseas company. If you are not clear and are evaluating your options for an ideal structure, our team would be glad to assist you.