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

Spread my blog..
  • 34

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.

If this article has helped you in any way, i would appreciate if you could share/like it or leave a comment. Thank you for visiting my blog.

Legal Disclaimer:
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.

Spread my blog..
  • 34
  • 34

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

  1. Hello Ma’am,

    Can a newly incorporated LLP be wholly owned by a Pvt Ltd company?


  2. Hi mam
    a German company incorporated WOS in india, 1 shares given to foreign individual as Nominee. if Indian (WOS ) company wants conduct AGM , what is qourum if the nominee Unable to attend the AGM

    Can the german company appoint Two Authorised representatives for the sake of Qourum???

    • In Annual General meeting in case of Private Limited company, quorum should be two. If one of the members is Body corporate or company incorporated outside India then that Body corporate shall appoint nominee who can attend the meeting and vote on its behalf because body corporate cannot vote on its own. The Body corporate can nominate person who can attend and vote in AGM by passing board resolution.

  3. Dear Mam,

    Japan company wants to start a business in India and the director of the proposed business will be two ( Indian and Japanese) with the authorised capital will be 10 lakhs. The directors will be holding 50% of shares each. In this situation what type of company can start whether WOS or Branch or joint venture. Kindly suggest this with detail explanation.

    Thanks and regards,

  4. I have one query that there is a requirement that every company must have 2 min members so how can a company can hold 100% shares of other company. It means only one shareholder exist in that subsidiary company.

    • For every private limited company minimum two members are required. If a company or body corporate wants to hold 100% shares of other ( i.e. subsidiary company) company then one shareholder shall declare to ROC that he holds 1 share on behalf of company and not having beneficial interest in share. One shareholder will become nominee of that company.

      • Hi Madam,

        This is nagarjuna , chartered accountant from Ongole

        As you told one shareholder declare to ROC that he holds 1 share on behalf of holding comapny and not having beneficial interest .Is there any form to intimate to ROC. How to fill SPICe form now. with respect to Individual who is subscriber

        • As per Section 89 of Companies Act 201, declaration in respect of beneficial interest in any share, holder of share shall make a declaration to the company inform MGT-4 that individual will hold shares on behalf of company but not having beneficial interest in shares. The parent company which actually holds shares shall declare in form MGT-5 and Indian company shall disclose the information in form MGT-6 to ROC within 30 days of receipt of declaration.

  5. I want form a 100% subsidiary Company of my Private Limited Company and transfer a division of the business to the new company.

    What is the procedure?
    Time required to complete all the formalities

  6. Hello Ma’am,

    Appreciate your well written responses here.
    My query is can an existing company become 100% wholly owned subsidiary of a foreign Company by transferring all its shares to Foreign Company? Will there be any extra compliance apart from share transfer and filing of FCTRS forms in this case.
    Thanks & regards

  7. Existing Indian Public Limited Company wants to open 100% subsidiary in India as Private Limited Company.
    What all is required to be done by existing Company, i.e. resolutions to be passed by Board/ Shareholders and other formalities.

    • Existing Indian Public Limited company shall be required to pass board resolution to open 100% subsidiary in India as private limited company and MOA AOA, certificate of incorporation is to be filed with INC-1 ( i.e. name application).

  8. Very detailed information, Thank you Meenal Abhyankar.

    Which are the sectors in India which allows 100% foreign investments?

  9. Hii mam i am himanshu tiwari and i want to starts opc company which works on product and marketings services(pesticides only marketing)
    1. what is the procedure to start opc company.?
    2. is trade mark is required in pesticides..?
    3. can we open subsidiary company in opc firm.?

  10. hi Maam, we are setting up indian subsidiary for companies in UAE and turkey (two diff companies), what is the formality or documentations required from the foriegn companies,

    • File documents require for DIN, Name application, registration in one form only SPICE i.e. INC-32, INC-33 ( Memorandum of Association ) INC-34 ( Articles of Association). If you need guidance please call me.

  11. Hii mam,

    can a parent company appoint nominee to any person other than it’s director, shareholder or employee.

  12. Ma’am,

    What is the procedure of winding upof a Wholly Owned Indian Subsidiary of a Foreign Company??

    Will it attract any section of FEMA, 1999? And as per company’s act,how will it differ than any other winding up????

  13. madam, i have a doub.

    In WOS, the company formed must have min. of 2 directors. Whether these two can be indians? or one must be the director of the forien company?

  14. Ma’am, WOS in India of foreign company with paid up capital of Rs. 1 Lac is small company ?

  15. Dear Mam,

    I have basic question, regarding approval from FIPB, when we need to take approval before incorporation or after incorporation, if the object of new wholly owned foreign subsidiary is under approval route. what is the procedure.

    Thanks in advance


    • If holding company holds all shares then for minimum two members, Holding company appoints nominee who can hold single share on behalf of Holding company.

      • What Complainces to be done for follow this procedure for appointing a nominee by the holding company.

        • The Holding company shall pass Board resolution for appointing a nominee of Holding company and nominee has no beneficial interest in shares held by Holding company then Indian company shall file MGT-4.MGT-5 and MGT-6 with ROC within 30 days of receipt of consent by Holding company. As secretarial practice, the company shall update Register of member and enter the name of nominee and create separate folio.

  17. dear mam,
    I would be really grateful if you could clarify a doubt. If a company X registered under companies act 2013 is a subsidiary of a foreign company Y and its not mentioned whether the subsidiary is wholly owned or not. whether company X is a foreign company or indian company? and according to which sections?

    • X is an Indian company because it is registered under Companies Act 2013 . As per Section 2(20) of the Companies Act 2013, company means a company incorporated under this Act or under any previous law. Though it is subsidiary of foreign company. It is Indian company.

  18. 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.


  20. Dear Mam,
    I have a query a holding company is holding 99.98% whereas 0.02% is holding by the directors. The holding company want total 100% of Holding. Can he hold 100% of Holding.

  21. 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

  22. Ma’am,

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

  23. 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.

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

  25. 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 ?

    • you will have to specify names of two shareholders as per Register of Members.

      • If 100% shares acquire by one company, it means only shareholders in wos company, than how it is possible ?(PVT. Ltd. Co)

        • To make wholly owned subsidiary in subsidiary company, all shares shall be held by Parent company. To comply the provision of company law to have minimum two members, one member shall hold 1 % share on behalf of Parent company and 99 % share will be held by Parent company.

          • Hello Ma’am,

            As per FCTRS filed by the company in the year 2013, all 100%shares are transferred to the Parent Company, but the Company law documents shows 1 share is held by an Individual, for which MGT-6 has been filed in the year, 2015.

            So what would be the Status of the Company??

          • Indian company will be wholly owned subsidiary of Parent company.

  26. 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

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

  28. 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.

  29. 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.

  30. 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.



Leave a Reply

Your email address will not be published. Required fields are marked *