Foreign companies have interest to start their operations in India as it is one of the largest and fast-growing markets in the world. A Foreign National other than a citizen of Pakistan or Bangladesh or an entity incorporated outside India can make investment and can own their subsidiary company in India by acquiring shares subject to the FDI Policy of India. There is a minimum requirement of one Indian Director who must be Indian Resident and one is to be Foreign Director, which is needed for incorporation of an Indian Subsidiary Company.

Subsidiary Company Registration also referred to as foreign company registration is governed by the Companies Act 2013 defines a subsidiary as a company in which a foreign corporate body owns no less than 50% of the entire share capital. A Subsidiary Company is also known as a sister company, and the company which exercises control over it is identified as the parent company or holding company. The parent company wholly or partially controls a subsidiary company. Subsidiaries must follow the laws of the country in which they are set up and running. Therefore, if the foreign subsidiary incorporated in India, then it must follow the law in force in India.

The FDI is allowed 100% for the increasing growth of several business industries in India without any prior approval. However, in the business of Proprietorship, Partnership and LLP require prior Government approval for FDI.

The liability of the members and the directors are strictly limited to their shares in the company. Therefore no member or Director is responsible for any loss or financial distress if suffered by the company. The assets of personally held by Shareholders/Directors will not be at risk or not seized by any banks, creditors or government.

The perpetual succession is continued existence of the company that means any changes in members such as death, bankruptcy, exit, transfer, etc. do not affect the existence of the company.

The expansion of the business is comparatively higher as it is easy to raise the capital from any financial institutions, venture capitalist, and the investor. It has all the advantages of the Private Ltd Company, which gives more transparency.

The wholly-owned subsidiary company in India can borrow funds in the form of loans from the financial institutions.

The Indian subsidiary company has the capacity to sue and can be sued. It has its own legal capacity being a legal person.

The foreign subsidiary company has an independent structure and hence, it is permitted them to buy properties in India.