Legal Permissibility Yes, a subsidiary incorporated in India can be listed on a foreign stock exchange, but only through specific routes permitted by Indian law. Direct listing of Indian companies on foreign exchanges is not yet fully operational but is expected to be...
Establishing Governance Structure The subsidiary must constitute a Board of Directors with clearly defined roles, including independent, executive, and non-executive directors if applicable. Governance roles and duties should be guided by the Companies Act, 2013, and...
Applicability Under Law Subsidiaries in India are required to establish and maintain adequate internal financial controls as mandated under Section 134(5)(e) and Section 177 of the Companies Act, 2013. These controls ensure the reliability of financial reporting,...
Board Composition and Appointment The parent company typically exercises control by appointing the Board of Directors of the subsidiary. It may nominate majority of directors, including the Managing Director or Whole-time Director, to ensure alignment with its...
Permissibility Under Law Yes, a subsidiary in India can repatriate royalty payments to its foreign parent company for licensed use of intellectual property (IP) such as trademarks, patents, know-how, and technical services. Such payments are allowed under the Foreign...
Eligibility of Subsidiaries Yes, an Indian subsidiary—whether wholly-owned or partially foreign-owned—is eligible to apply for government incentives, provided it meets the conditions of the specific scheme. Incentives are not restricted by ownership status but by...
Definition and Status Recognition A dormant subsidiary is a company that has no significant accounting transactions and is not actively carrying on business. Under Section 455 of the Companies Act, 2013, such a company can apply for dormant status to reduce compliance...
Permissibility Under Law Yes, a subsidiary can be acquired by another Indian company as per the provisions of the Companies Act, 2013, and relevant SEBI, FEMA, and Income Tax laws. The acquisition may be of 100% or partial shareholding, depending on the commercial...
Governing Provisions The resignation of a foreign director is governed by the Companies Act, 2013, specifically Section 168, along with the company’s Articles of Association (AOA). The same rules apply to both resident and non-resident directors, subject to additional...
Governing Laws and Applicability Transfer of shares in subsidiaries is regulated under the Companies Act, 2013, Articles of Association (AOA) of the company, and where applicable, Foreign Exchange Management Act (FEMA) for foreign shareholders. The nature of the...