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Foreign company as a shareholder

C Reddy (Entreprenuer) (133 Points)

24 February 2016

Dear Members,

A company in Malaysia wants to incorporate a private limited company in India with 80% share holding, making it a wholly owned subsidiary. The company will be an software company where 100% foreign investment is allowed.

The promoters will be the Malaysian company and an Indian individual. The Malaysian company will be represented by one of the directors.

Is this possible under the current Company incorporation rules?

Please advice.

Thank you.

Regards

Chandana

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2 Replies

prakash (Company Secretary) (1352 Points)
Replied 24 February 2016

Chandana,

It is possible, you can go ahead with incorporation but my query is, how can it be wholly owned subsidiary of Malaysian Company, when that company is holding only 80% of stake, in order to call it as wholly owned subsidiary, Malaysian company should hold entire share capital of subsidiary company, in that case, malaysian company will nominated one person to hold one or two shares to comply with law to have minimum two shareholders.

One person who is resident of India should be director in the Company.

You have to comply with procedural aspects of Incorporation, getting extrat of Board resolution from malaysian authorized to invest and sign the incorporation documents, go for apostle or notary in Malaysia on Subscripttion sheets, INC-9, INC-10 and other relavent incorporation documents.