Expanding Horizons: End-to-End Legal Support for Setting Up a US-Owned Subsidiary in India

• Entity Structuring and Regulatory Strategy: We conducted a comparative legal and tax analysis of various forms of business presence available under Indian law—ranging from liaison offices and branch offices to wholly owned subsidiaries. After assessing the client’s commercial objectives, operational needs, and repatriation expectations, we advised them to incorporate a private limited company as the most tax-efficient and operationally flexible vehicle under Indian law.
• Corporate Incorporation and Documentation: Our team managed the entire incorporation process with the Ministry of Corporate Affairs. This included obtaining Director Identification Numbers (DINs), Digital Signature Certificates (DSCs), and securing PAN and TAN registrations. We also prepared and filed the incorporation forms, liaised with the Registrar of Companies, and coordinated with stakeholders at every step to ensure a seamless and time-bound registration.
• Charter Document Drafting: We drafted a bespoke Memorandum and Articles of Association (MoA and AoA) that captured the client's unique operational requirements, while remaining fully compliant with the provisions of the Companies Act, 2013. Specific attention was given to shareholding structure, directorial control, and reserved matters that align with global governance policies of the parent company.
• FDI Compliance and Sectoral Permissions: As the investment involved foreign shareholding, we advised the client on the applicable Foreign Direct Investment (FDI) policy, including sectoral caps and automatic vs. government approval routes. Since the IT sector falls under the automatic route, we guided the client through necessary filings under the Foreign Exchange Management Act (FEMA), including issuance of equity shares within prescribed timelines and submission of Form FC-GPR with the Reserve Bank of India (RBI).
• Repatriation Strategy and Tax Structuring: One of the most critical aspects of our engagement was structuring an effective profit repatriation mechanism that would ensure lawful, tax-efficient transfers of funds from India to the United States. To this end, we developed a customized framework for royalty payments, dividend distribution, and service fee structures, leveraging the provisions of the India–US Double Taxation Avoidance Agreement (DTAA) and relevant FEMA regulations. The final structure ensured minimal withholding tax impact while maintaining transparent and compliant tax records in India.

The Indian subsidiary was successfully incorporated within a four-week period, fully compliant with Indian corporate and FDI laws. The operational and financial framework created by Shepherd Knight LLP now enables the client to remit dividends, royalties, and service fees to its US parent entity in a legally sound and fiscally optimized manner.

Our involvement helped the client achieve both strategic and operational readiness in India, while also laying down a robust legal foundation for long-term growth, cross-border compliance, and risk management.