Formation of Wholly Owned Subsidiary Company (Private Limited) in India

Before taking a look at the Wholly Owned Subsidiary (WOS) Formation Procedure, would like to describe some basics.

What is WOS (Wholly Owned Subsidiary) ?

When one company is 100 % owned by another company, it is called Wholly Owned Subsidiary of the company who has made 1oo % investment in it.

e.g. ABC Pvt. Ltd. is 100%  owned by XYZ Pvt. Ltd. Here ABC Pvt. Ltd is Wholly Owned Subsidiary of XYZ Pvt. Ltd.

What is WOS by foreign entities in India? 

When an entity which is registered or incorporated outside India (i.e. foreign country), makes 100% Foreign Direct Investment (FDI) in India [as per Indian FDI Policy few sectors are permitted for 100% FDI in India], the Indian Company is said to be Wholly Owned Subsidiary of that foreign entity.

e.g.  ABC Private Limited is 100% owned by XYZ Inc, registered in USA. Here ABC Private Limited is Wholly Owned Subsidiary of XYZ Inc.

Mode of Formation

Wholly owned Subsidiary can be formed either as a private or public company, limited by shares of guarantee or an unlimited liability company. There are more exemptions available to a private limited company under the Indian Companies Act 1956, hence most of the companies prefer to form WOS Private Limited company.

Key Features of WOS

  • Wholly Owned Subsidiary is regulated by Indian Law  i.e. Companies  Act 1956.
  • All types of business activities are permitted such as manufacturing, marketing, services industry.
  • Where 100% FDI is permitted no prior approval of Reserve Bank of India is needed. Refer : FAQ’s on FDI by Reserve Bank of India (RBI)
  • It is treated as domestic company under Indian Tax Law and is eligible for all exemptions, deductions benefits as applicable to any other Indian Company.
  • Funding can be made in the form of share capital or loan.

Minimum requirements

1. It requires minimum two directors, two shareholders

2. Minimum Authorised and Paid Up capital of Rs. 1 Lakh.

WOS Formation Procedure in brief

  • Two directors shall be required to apply for DIN (Director Identification Number).
  • One of the directors needs to apply for Digital Signature Certificate.
  • An applicant needs to apply for name in e-form 1A with the Registrar of Companies in which the company is to be incorporated.
  • After obtaining approval of name from the Registrar of Companies (RoC), an applicant needs to submit Form 1 (Incorporation of company) 18 (Notice of situation of registered office) and 32 (Appointment of first directors) along with Memorandum and Articles of Association of the proposed company.
  • After filing of documents online, an applicant needs to pay RoC fees and Stamp Duty electronically (this is based upon the Authorised Capital of the Company).
  • After payment of all stamp duties and RoC fees, RoC verifies all the documents and forms.  Form18 and Form32 are approved by STP (Straight through Process) immediately and RoC checks Form 1 in detail and may suggest some changes to be made in the attachments or in form itself. We need to make necessary changes accordingly.
  • After verification by RoC and satisfied by it, it shall send soft copy of Certificate of Incorporation via email.


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The information / articles & any replies to the comments on this blog are provided purely for informational and educational purposes only & are purely based on my understanding / knowledge. They do not constitute legal advice or legal opinions. The information / articles & any replies to the comments are intended but not promised or guaranteed to be current, complete, or up-to-date and should in no way be taken as a legal advice or an indication of future results. Therefore, I can not take any responsibility for the results or consequences of any attempt to use or adopt any of the information presented on this blog. You are advised not to act or rely on any information/article contained without first seeking the advice of a Practicing Professional.

280 thoughts on “Formation of Wholly Owned Subsidiary Company (Private Limited) in India

  1. how documents can be apostiled and noterised? What is diffrence in it? and who apostile the document..?is it coumpolsory to notrised and apostile all document while forming WOS.?what is procedure in india for same WOS?

    • Please refer Companies Incorporation Rules 2014 and Hague Convention Act. The Apostil is different authority who provides certificate on notarised documents. Please check whether the foreign national is staying in country which is common wealth or non common wealth country. Based upon apostil is necessary.

  2. Hello Mam,

    One of my client want to open a branch office in India. They first want to start with giving me job opportunity and later want to have more employees on board.
    They want to have 100% ownership in the company, but want to spend less. Can you please suggest to the procedure of opening a branch office in India with all different procedures like Proprietor, PVT LTD, Partnership

  3. Ma’am,

    Can we incorporate a 100% subsidiary of a foreign LLC , it is incorporated in Kuwait

  4. Hello Madam,

    Thanks for informative article. I have query.

    For Singapore based foreign national or NRI, whether both attestation from foreign public notary and Indian Embassy will require or only attestation from foreign public notary is sufficient. I think as per Hague Convention apostille is not mandatory.

    Please guide.

    • Thanks for your comment. Please refer Companies (Incorporation Rules). You will have to check the list of common wealth countries and Hague Convention Act and guide accordingly.

      Where subscriber to the memorandum is a foreign national residing outside India-

      (a) in a country in any part of the Commonwealth, his signatures and address on the
      memorandum and articles of association and proof of identity shall be notarized by a
      Notary (Public) in that part of the Commonwealth.

      (b) in a country which is a party to the Hague Apostille Convention, 1961, his signatures and
      address on the memorandum and articles of association and proof of identity shall be
      notarized before the Notary (Public) of the country of his origin and be duly apostillised
      in accordance with the said Hague Convention.

      (c ) in a country outside the Commonwealth and which is not a party to the Hague Apostille
      Convention, 1961, his signatures and address on the memorandum and articles of
      association and proof of identity, shall be notarized before the Notary (Public) of such
      country and the certificate of the Notary (Public) shall be authenticated by a Diplomatic
      or Consular Officer empowered in this behalf under section 3 of the Diplomatic and
      Consular Officers (Oaths and Fees) Act, 1948 (40 of 1948) or, where there is no such
      officer by any of the officials mentioned in section 6 of the Commissioners of Oaths Act,
      1889 (52 and 53 Vic.C.10), or in any Act amending the same;

      (d) visited in India and intended to incorporate a company, in such case the incorporation shall be allowed if, he/she is
      having a valid Business Visa.

      Explanation.- For the purposes of this clause, it is hereby clarified that, in case of Person is of Indian Origin or Overseas
      Citizen of India, requirement of business Visa shall not be applicable.

  5. can a WOS invest in the shares of its Holding company.

  6. While filing MGT-7 in case of WOS, minimum shareholders required are 2 whereas entire shares are held by one company. How to fill the form ?

  7. hello mam my query is…if a pvt. company holds 9900 shares in another pvt. conpany and 100 shares are held by director of company which is common in both the companies…will it be it considered as wholly owned subsidiary

  8. In case of the 99.99% & 0.01% being held by Body corporates. Do we require to file MGT-6.

  9. Hi Mam,

    My query is what shall be the status of the foreign entity (which has WOS in India). Whether this entity be recognised as the Foreign Company under the Companies Act 2013?

    • Please refer Section 2(42) of Companies Act 2013, foreign company means any company or body corporate incorporated outside India which a ) has a place of business in India whether by itself or through an agent, physically or through electronic mode and b) conducts any business activity in India in any other manner.
      In your case foreign entity is foreign company.

  10. I have a query. A private company in India is having 3 shareholders. The parent company is a foreign company and holding 50% shares in the Indian entity. The other 2 shareholders are holding shares as nominee shareholders. Each having 25% shareholding.
    The shares are to be transferred in such a way that the parent company holds 99.99% shares and remaining 0.01% shares will be with some other nominee.
    Please let me know whether any transfer deed would be required in such a case? Will transfer of shares from nominee to the parent company constitute transfer and a requisite transfer deed be required in such a case?

    • The existing nominee shall transfer the shares to parent company by giving consent of transfer, passing board resolution by company and signing SH-4 ( share transfer form) . Now since the transfer it between nominee ( resident Indian) to Parent company, as per FEMA Guidelines, the transfer by way of filing FCTRS is to be reported to Reserve Bank of India within 60 days of receipt of consideration.

  11. hi mam, I appreciate your patience for giving good response to all queries. am having following queries, request you to send your valuable suggestions.
    Our company got incorporated in the month of june-15 & it is WOS. Now, the foreign company wants to transfer the share to WOS. Could you please forward procedures for the same.

    Regards.

    Richard

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