Shareholders, directors and the registered office

An Indian private limited company needs two shareholders and two directors, and at least one of those directors must have lived in India for 182 days. Both requirements have a standard, boring answer that leaves the foreign parent owning 100% of the company.

Settle all of it before any paperwork starts. Once the incorporation form is submitted, capital structure, directors and objects are frozen, and a resubmission cannot change them.

How many shareholders does an Indian subsidiary need?

Two, minimum, with no maximum. For a wholly owned subsidiary one of them is the foreign parent company. The second holds a single share and exists only to satisfy the count.

The structure almost every foreign subsidiary uses:

The nominee holds that one share under the Companies Act, 2013 and nothing else. No voting rights beyond the share, no claim on profits or dividends, no role in management. After incorporation you file three forms that put the arrangement on the record: the nominee declares they hold for someone else in MGT-4, the parent declares its beneficial interest in MGT-5, and the company files MGT-6 with the registrar. That filing is what makes the subsidiary wholly owned on paper, and auditors, banks and future investors all look for it.

Who should the nominee shareholder be?

Three people get offered the job: someone from the parent company, an employee of the new subsidiary, or a professional nominee. Use a professional nominee.

Using an employee saves a few thousand dollars a year. We have watched what happens when that person resigns or the relationship sours: changing the shareholding or getting a document signed turns into a negotiation with someone who no longer works for you. It holds up liquidity events, complicates annual filings, and occasionally ends in court. A professional nominee has defined duties and no reason to hold you up.

Why does India require a resident director?

So there is someone inside the jurisdiction who is accountable. Every Indian private limited company needs at least one director who has resided in India for 182 days or more in the preceding financial year. It is mandatory under the Companies Act, 2013 and there is no waiver.

The rest of the board can be foreign nationals. Their KYC documents have to be notarised and apostilled, and every director needs a Digital Signature Certificate before anything can be filed.

How do you get an Indian resident director if you have no friends in India?

You buy the service. Accounting and secretarial firms provide resident directors, Commenda included, so finding a trusted Indian contact is not a prerequisite for incorporating.

A director does not own anything

Directors manage. Shareholders own. They are two different jobs and India keeps them strictly apart.

A resident director holds no equity, takes no dividend, and can be removed by a shareholder vote that the parent controls outright. The economic ownership never leaves the parent company. Most companies also paper the relationship with an agreement.

How many directors do you actually need?

Two is the legal minimum. The most common shape for a two-founder company is three directors: the two founders plus the resident director, against two shareholders.

Board resolutions need a foreign director's signature on the majority of the board, so think about the count before you set it. A board of two, where one is the resident director, gives you less room than a board of three.

What counts as a registered office in India?

A real, verifiable address in India, required from the date of incorporation. It is where all government correspondence lands and where the bank or the GST authorities will turn up if they decide to check. It does not have to be where your team works.

1. You own the property. Utility bill in the owner's name, not older than one month, plus a no-objection certificate from the owner.
2. You rent the property. Signed and stamped lease, plus a utility bill not older than one month, plus the owner's NOC.
3. You use a virtual office. An address service that satisfies the statutory requirement and supplies the documents with it.

For most foreign companies starting out, the virtual office is the right answer. You are unlikely to own or rent space before operations are running, and there is no statutory reason to. Move the registered office to real premises later, once a substantial part of the business is being run from India.

Pvt Ltd or LLP?

Private limited, unless you have a specific reason not to. An LLP has partners and capital accounts, not shares. If anyone needs to hold equity, if you plan to raise, or if the parent wants a clean 100% holding, an LLP is the wrong instrument.

• One Person Company exists for solo founders. Commenda does not support it and it is out of scope here.
• Sole proprietorship is not available to foreign nationals at all.

With the structure settled, the next section walks the filing itself, step by step, with the working days each one takes. See the incorporation process.