How to Set Up a Wholly Owned Subsidiary (WOS) in India : A complete Guide
- 22/03/2025
- Posted by: admin
- Categories: Company Law, Non Residents
Introduction
India’s rapidly growing economy presents attractive opportunities for foreign investors. Establishing a Wholly Owned Subsidiary (WOS) in India allows foreign companies to maintain 100% ownership while accessing the vast Indian market. A WOS is a private limited company offering complete control, limited liability, and an independent legal structure.
This guide outlines the step-by-step process for registering a Wholly Owned Subsidiary in India.
Why Set Up a Wholly Owned Subsidiary in India?
Benefits of a Wholly Owned Subsidiary
✓ Complete Foreign Ownership: Foreign companies or individuals can own 100% of the shares without the need for an Indian partner.
✓ Limited Liability: The parent company’s liability is limited to its investment.
✓ Independent Legal Entity: Operates as a distinct legal entity separate from the parent company.
✓ Tax Benefits: Corporate tax rates are lower than foreign branches (25% vs. 40%).
✓ Market Access: Direct entry into one of the world’s largest consumer markets.
Restrictions on Foreign Companies in India
✓ Government approval is required for sectors like defense, telecom, and media. Download complete List
✓ Retail trading, agriculture, and real estate have sectoral restrictions.
✓ Compliance with FEMA (Foreign Exchange Management Act) and RBI regulations is mandatory.
Step-by-Step Guide to Register a Wholly Owned Subsidiary in India
Step 1: Choose the Appropriate Business Structure
A Wholly Owned Subsidiary is generally registered as a Private Limited Company under the Companies Act, 2013. In some cases, a Public Limited Company may be preferred for large-scale operations.
✓ Private Limited Company: Minimum 2 Directors and 2 Shareholders.
✓ Public Limited Company: Minimum 3 Directors and 7 Shareholders.
Step 2: Obtain Digital Signature Certificate (DSC) and Director Identification Number (DIN)
The directors of the company must acquire a DSC and DIN for the registration process.
Process:
✓ Apply for a Digital Signature Certificate (DSC) from authorized agencies.
✓ Obtain a Director Identification Number (DIN) via the MCA (Ministry of Corporate Affairs) portal.
✓ Submit identity proof, address proof, and passport copies of foreign directors.
Processing Time: 2-3 days
Step 3: Reserve Company Name with RUN (MCA Portal)
✓ Choose a unique company name that ends with “Private Limited.” or “Public Limited”
✓ Check availability using the MCA Portal.
✓ Submit a name reservation application using the RUN (Reserve Unique Name) service.
Processing Time: 2-5 days
Step 4: Draft MOA and AOA for Incorporation
Required Documents:
✓ Memorandum of Association (MOA): Defines the company’s objectives.
✓ Articles of Association (AOA): Outlines the company’s operational rules.
✓ Board resolution from the parent company approving the WOS setup.
✓ Notarized and apostilled incorporation documents of the parent company.
✓ Proof of registered office in India (e.g., rental agreement or utility bill).
Processing Time: 3-5 days
Step 5: File Incorporation Application with MCA
File the SPICe+ (INC-32) Form with the MCA for company incorporation.
Required Documents:
✓ DSC and DIN of the directors.
✓ MOA and AOA.
✓ PAN and passport copies of foreign directors.
✓ Registered office address proof.
✓ NOC from the property owner.
Processing Time: 7-10 days
Upon approval, the MCA issues a Certificate of Incorporation (COI) with a Company Identification Number (CIN).
Step 6: Apply for PAN, TAN, and GST Registration
Post incorporation, the WOS needs to apply for the following:
✓ PAN (Permanent Account Number) for taxation purposes.
✓ TAN (Tax Deduction and Collection Account Number).
✓ GST Registration if the turnover is expected to exceed ₹20 lakh for services or ₹40 lakh for goods (subject to state-specific variations).
Processing Time: 1-2 weeks
Step 7: Open a Bank Account and Complete Compliance Registration
Documents Required for Bank Account:
✓ Certificate of Incorporation.
✓ PAN Card of the company.
✓ Board Resolution authorizing the account opening.
✓ KYC documents of directors and authorized signatories.
Compliance Requirements:
✓ File Form FC-GPR within 30 days of share allotment for FEMA compliance.
✓ Annual filings using Form AOC-4 and MGT-7 with the MCA.
✓ Annual income tax filing and audits.
Processing Time: 1-2 weeks
Business Visa Requirements
A business visa is not required for a non-resident director or shareholder to incorporate a company in India if they are not physically present during the process. However, visas may be necessary in the following cases:
✓ Business Visa: Required for directors visiting India for company setup, meetings, or operations.
✓ Employment Visa (E-Visa): Required if the foreign director will be employed in the Indian subsidiary.
Apostille and Embassy Attestation
The notarization and attestation requirements for foreign documents depend on the country of origin:
✓ Hague Convention Countries:
If the foreign director/shareholder is from a country that is a member of the Hague Convention, then apostille is required instead of embassy attestation.
The document must be notarized locally first.
Then, it must be apostilled by the designated authority (e.g., Secretary of State in the USA, FCDO in the UK).
No further attestation from the Indian Embassy is required.
Example: USA, UK, Canada, Australia, Germany, France, etc.
Documents need to be notarized and apostilled. Further attestation by the Indian Embassy is not required.
✓ Non-Hague Convention Countries:
If the foreign director/shareholder is from a country not part of the Hague Convention, the document must be:
Notarized locally in their home country.
Authenticated by the Ministry of Foreign Affairs (MOFA) of that country.
Attested by the Indian Embassy/Consulate in that country.
Example: UAE, Saudi Arabia, Qatar, China, Egypt, etc
Documents must be notarized, authenticated by the Ministry of Foreign Affairs (MOFA), and attested by the Indian Embassy.
Documents Requiring Notarization and Apostille/Attestation:
✓ Passport copies of foreign directors/shareholders.
✓ Board resolution for investment/nomination.
✓ Certificate of Incorporation, MOA, and AOA of the parent company (if applicable).
Conclusion
Setting up a Wholly Owned Subsidiary in India offers foreign companies complete ownership and market access. By following this comprehensive step-by-step guide, businesses can ensure compliance with Indian laws while efficiently expanding their operations.
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