Wholly Owned Subsidiary2022-09-26T20:49:47+05:30

Wholly Owned Subsidiary in India

A Wholly Owned Subsidiary in India (WOS) is a company whose 100% shares are owned by a foreign parent company. Foreign-based companies are eligible to incorporate wholly-owned subsidiaries in India as it has various benefits such as having complete control over operations, diversification, utilization of Indian resources, reduction of risk etc.

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    Wholly Owned Subsidiary in India

    A wholly-owned Indian subsidiary is one of the most feasible and viable option for a foreign entity to set up business in India. In case of wholly owned subsidiary (WOS), 100% shares are owned by another foreign company, known as a parent company or holding company.

    A Wholly Owned Subsidiary (WOS) can be in the form of a Private Limited Company or Public Limited Company, the parent company or owner’s liability is limited to their shares in the company. A Wholly Owned Subsidiary (WOS) of a Foreign Company in India is governed by the Companies Act 2013 and the Foreign Exchange Management Rules/Regulation issued by the central government and the Reserve bank of India (RBI).

    Features of Wholly Owned Subsidiary in India

    • A Foreign Company can incorporate a Wholly Owned Subsidiary (WOS) Company with majority stake (For Example 99.99% of the total shares) while the remaining stake shall be issued to a person nominated by a foreign company who shall hold the share in beneficial interest on behalf of the company. This is in order to satisfy the minimum shareholder criteria of number two (2) in case of a Private Company and seven (7) in case of a Public Company.
    • All the shareholders in a Wholly Owned Subsidiary (WOS) Company may be foreign nationals, there shall be atleast 2 (two) directors in a Wholly Owned Subsidiary (WOS) out of which atleast one (1) director shall be a permanent resident of India.
    • Investments can be made by non-residents or foreign nationals in the equity shares, debentures, or preference shares of Wholly Owned Subsidiary (WOS), through the Automatic Route or the Government Route. Under the Automatic Route, the non-resident investor or the Indian company does not require any approval from the Government of India for the investment. However, under the Government Route, prior approval of the Government of India is required.
    • There are certain sectors/fields where investments can be made by non-residents or foreign nationals only to the extent of the percentage of the total capital as specified in the FDI policy. However, major sectors in India except a few are open for 100% foreign investments.
    • Investments made by non-residents and foreign nationals have to be reported to the Reserve Bank of India (RBI) as per the Foreign Exchange Management Rules/Regulations.

    Advantages of Wholly Owned Subsidiary in India

    • Separate legal entity

      Similar to a company, Wholly Owned Subsidiary (WOS) once registered, is known as a separate artificial person in the eyes of law and the liability of each member or shareholder is limited up to the unpaid amount of shares. It means that if a company faces loss under any circumstances, then its parent company is not liable to sell its own assets for payment.

    • Complete Control by Parent Company

      The parent or the holding company due to its complete shareholding in Wholly Owned Subsidiary (WOS), controls the affairs and strategies of the Indian company.

    • Easy to register

      A Wholly Owned Subsidiary (WOS) can be registered completely online with less paperwork. The process of registration can be completed within 12-15 working days.

    • Global brand image and goodwill

      The Wholly Owned Subsidiary (WOS) Company can reap the benefits of a good brand name and goodwill of a well-established parent company outside India, which shall also increase the overall valuation and market share of the parent in the product/service market.

    • Expansion and Diversification

      India being a huge population and consumption-based market has a great potential for new goods and services, therefore a foreign company can plan for its expansion and diversification through formation of a Wholly Owned Subsidiary (WOS) Company.

    • Easy to dissolve or wind-up

      The structure of Wholly Owned Subsidiary (WOS) Company provides faster exit opportunities to those companies which do not have any assets or outstanding liabilities and want to close the business operations due to some extraordinary circumstances.

    Minimum Requirements for Wholly Owned Subsidiary in India

    • Shareholding of Parent or Holding Company

    • Minimum Two Shareholder – Foreign Company and a Nominee Shareholder

    • Minimum Two Director (At least 1 Director shall be a permanent resident of India)

    • Minimum capital of 2 Rupees

    • DIN for Directors

    • DSC for Indian Directors

    • Business activity permitted by Foreign Exchange Management Act/FDI Policy

    • Indian office address proof

    What Is Included in our Wholly Owned Subsidiary Package?

    • Company name search and approval

    • Digital Signature Certificate (DSC) for 2 Director/Shareholder

    • Director Identification Number (DIN) for 2 Directors

    • Certificate of Incorporation/Registration

    • Company PAN and TAN

    • Memorandum of Association (MOA) and Articles of Association (AOA)

    • Supporting Document for opening Bank Account

    • Employees State Insurance Corporation Registration (ESIC) and Employees Provident Fund Registration (EPFO)

    • Professional Tax Registration (For Companies registered in the state of Maharashtra and Karnataka only)

    • Company Master File Kit

    Procedure for Wholly Owned Subsidiary in India

    • Application for Name Approval

      The applicant shall provide 2 (two) different names and main objects of the Wholly Owned Subsidiary (WOS) Company which shall be submitted to MCA for approval, out of which one name will be approved. The parent company can keep its initial name or name of its trademark along with the suffix “Private Limited/Limited”. A copy of NOC/Board resolution and requisite document duly notarized and/or apostilled shall also be submitted to the MCA.

    • Application for Digital Signature Certificate (DSC)

      Once the name is applied, we shall apply Digital Signature Certificate (DSC) of shareholders and/or directors for digitally signing the forms. If the directors/shareholders already have DSC, then this step can be skipped.

    • Submission of Incorporation Forms

      After the name is approved and DSC is generated, we need to prepare and submit incorporation application in SPICE+ forms along with Memorandum of Association (MOA), Articles of Association (AOA), INC 9, AGILE Form, Declarations, and KYC Documents of Director/Shareholder for final approval. Documents signed and executed in a foreign country shall be duly apostilled or notarized in the country of origin as per Incorporation rules.

    • Get incorporation Documents

      It typically takes 5-7 days after final submission to get the incorporation certificate. Incorporation certification is a proof that the company has been registered. PAN, TAN, ESIC, EPFO, Professional Tax registration certificate will also be received simultaneously.

    • Opening of Bank Account

      Applicant can submit the Incorporation certificate, MOA, AOA, PAN, TAN, and other required documents to the bank to open the current account and start the business operations. Shareholders shall make payment in respect of their shares through banking channels.

    Documents Required for Wholly Owned Subsidiary in India

    • List of documents to be submitted by the Director and Shareholders–

      Following are the documents that are required to be submitted by all the proposed directors and shareholders of the company. All documents submitted should be valid and readable.

      • Scanned copy of PAN Card (mandatory for Indian Nationals)
      • Scanned copy of Passport (mandatory for Foreign Nationals/NRI)
      • Scanned copy of Aadhaar Card/Voters ID/Passport/Driving License
      • Scanned copy of Latest Bank Statement/Telephone Bill/Post-paid Mobile Bill/Electricity Bill (The address proof shall be recent and not older than 2 months)
      • Scanned passport sized photograph
      • Business Visa or Overseas citizen of India (OCI) Card (For Individuals carrying out the incorporation process by visiting India)
      • An Apostilled copy of the charter documents of the Foreign Company translated in English
      • If the company decides to use its trademark or original name while starting business in India, then the company would need to provide NOC from the foreign company to use the same in the form of Board Resolution
    • Registered Office Proof-

      Private Limited Company should have a registered office place in India. The office address can be residential or commercial premises. The address proof shall be recent and not older than 2 months. Following are the list of documents to be submitted as Registered Office Address proof –

      • Scanned copy of utility bill such as Electricity bill/Mobile Post-paid bill/Landline Post-paid bill/Gas bill/Water bill
      • Scanned copy of No-objection Certificate from property owner or whose name appears on such utility bill

    FAQ

    Do I need to be physically present during this process?2022-01-20T00:34:07+05:30

    No, company registration is a completely online process. All the required documents are filed electronically, so you would not need to be physically present at all. You would just need to send us scanned copies of all the required documents & forms.

    Who can be the shareholder/member of a Wholly Owned Subsidiary (WOS) Company?2022-01-20T00:33:16+05:30

    A Foreign Company can incorporate a Wholly Owned Subsidiary (WOS) Private Limited Company with majority stake, while the remaining stake shall be issued to a person/body corporate/trust nominated by a foreign company who shall hold the share in beneficial interest on behalf of the company. This is in order to satisfy the minimum shareholder criteria of number two (2) in case of Private Company and seven (7) in case of Public Company as per the Indian Companies Act.

    Can directors and shareholders be the same person in the company?2022-01-20T00:27:22+05:30

    Yes, directors and shareholders can be the same person in a company. But if you want to have separation in ownership and management, then you can appoint a different individual as shareholders and directors.

    Is it required to have Company’s books audited?2022-01-20T00:21:33+05:30

    Yes, a company should get its book audited and file the same with the Registrar of Companies (ROC) every year.

    Can I register a Wholly Owned Subsidiary (WOS) Company on my home or residential address?2022-01-20T00:20:58+05:30

    Yes, you can register the company at your residential address. You need to submit the utility bill of your home address along with the No Objection Certificate from the owner of the premises.

    Can NRIs/Foreign Nationals become Director and Shareholder in a Wholly Owned Subsidiary (WOS) Company in India?2022-01-20T00:20:20+05:30

    Yes, NRIs and Foreign National can become directors and shareholders in a Wholly Owned Subsidiary (WOS) Company along with the required documents, also they can hold majority shares in the company. However, at least one Director on the Board of Directors should be a permanent resident of India.

    Can I induct any other Company, Body Corporate LLP, as a shareholder in my company?2022-01-20T00:19:19+05:30

    Yes, you can induct or allot shares to any other Private Limited Company, Public Company, LLP, Body Corporate, Registered Society.

    Is GST mandatory for a Wholly Owned Subsidiary (WOS) Company?2022-01-20T00:17:06+05:30

    GST registration is required for those businesses whose aggregate turnover crosses the prescribed limit or such business that does the inter-state supply of goods/services, etc. So, every company has to check whether it supplies goods to different states or qualifies for the prescribed turnover limit or any other conditions as specified under GST laws. For more information, you can visit – https://registrationarena.com/gst-registration/

    Is there any renewal process for a Wholly Owned Subsidiary (WOS) Company?2022-01-20T00:14:31+05:30

    No, there is no renewal of a Wholly Owned Subsidiary (WOS) Company, once it’s registered it will be valid for a lifetime. However, you have to do mandatory compliance every year.

    Is FEMA Compliance and RBI reporting required even if the Foreign Direct Investment (FDI) is through the Automatic Route?2022-06-05T00:47:41+05:30

    Yes, a company that receives Foreign Direct Investment (FDI) must comply with the FEMA provision and needs to file Form FC-GPR with RBI within 30 days from the date of receipt of money in respect of the shares allotted. Further, equity shares, debentures, or preference shares of Wholly Owned Subsidiary (WOS) should be issued within 60 (sixty) days from the date of receipt of the money. In case, if the instruments are not issued within 60 days, the amount of consideration so received should be refunded within fifteen (15) days to the non-resident investor.

    Whether any annual return for Wholly Owned Subsidiary (WOS) Company is required to be filed with RBI ?2022-01-20T00:09:52+05:30

    Yes, Wholly Owned Subsidiary (WOS) Company needs to file FLA return to RBI before 15th July after the end of the relevant financial year.

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