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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