Minimum Capital, Directors & Shareholders for an Indian Subsidiary of a Foreign Company
Before incorporating an Indian subsidiary, foreign companies want clarity on the basic structural requirements: how much capital is needed, how many directors and shareholders, and whether a local director is mandatory. This guide sets out the minimum capital, director, and shareholder requirements for an Indian subsidiary of a foreign company under the Companies Act, 2013.
Minimum Capital Requirement
There is no prescribed minimum paid-up capital for a private limited company in India. The old requirement of ₹1 lakh was removed years ago. In practice, you should choose an authorised and paid-up capital that realistically supports your operations, satisfies any sectoral conditions, and looks credible to banks and partners. Many foreign subsidiaries start with capital in the range of a few lakh rupees and increase it as the business grows.
Capital must be brought in from the parent through normal banking channels, and the inward remittance reported to RBI via FC-GPR.
Shareholder Requirements
A private limited company requires a minimum of two shareholders and allows a maximum of 200. For a wholly owned subsidiary, the foreign parent holds the bulk of the shares and a nominee shareholder holds at least one share on the parent’s behalf, preserving 100% beneficial ownership. Shareholders can be individuals or corporate entities, Indian or foreign.
Director Requirements
A private limited company needs a minimum of two directors and can have up to fifteen. The critical rule for foreign subsidiaries is the resident director requirement.
The Resident Director Rule
At least one director must be a resident of India — defined as a person who has stayed in India for 182 days or more during the previous financial year. The remaining directors can be foreign nationals residing abroad. Where the foreign company does not have a suitable resident, professional firms can help arrange a compliant resident director. For the broader rules on NRI and foreign directors, see can an NRI be a director in an Indian company.
Director Identification Number (DIN)
Every director needs a DIN, which is allotted through the SPICe+ incorporation form. Each director also needs a Digital Signature Certificate (DSC) to sign electronic filings.
Registered Office
The company must have a registered office in India from the date of incorporation (or within 30 days). Proof of address, an NOC from the owner, and a utility bill are required. A virtual or shared office is acceptable provided valid address proof is available.
Summary Table
| Requirement | Private Limited Subsidiary |
|---|---|
| Minimum capital | No statutory minimum |
| Shareholders | Minimum 2, maximum 200 |
| Directors | Minimum 2, maximum 15 |
| Resident director | At least 1 mandatory |
| Registered office | Mandatory in India |
| FDI reporting | FC-GPR within 30 days |
Foreign Ownership Limits
In most sectors, the foreign parent can hold up to 100% of the equity under the automatic route. Some sectors have caps or require government approval — see our note on the automatic route vs the government route and the full foreign subsidiary setup guide.
Frequently Asked Questions
Is ₹1 lakh capital still mandatory?
No. There is no minimum paid-up capital for a private limited company; you choose a realistic amount.
Can both directors be foreign nationals?
No. At least one director must be resident in India for 182 days or more in the previous financial year.
Can a company be a shareholder?
Yes. The foreign parent company itself holds the shares of the Indian subsidiary.
How is the resident director requirement met by a new company?
You can appoint an existing Indian resident or engage a professional firm to provide a compliant resident director.
Structure Your Subsidiary Correctly
S. Choudhary & Co. advises foreign companies on the optimal capital structure, directorship, and shareholding for their Indian subsidiary. Explore our incorporation services or call +91 90248 28295 · sushil@sushilchoudhary.com.
