Setting up Wholly Owned Subsidiary Company in India

by EzyBiz India Tax & Accounting Consulting Firm
Wholly-owned subsidiary in India is a form of company registration in which the parent company owns all the shares of the subsidiary company. It implicates that the parent company has full control over the subsidiary and can select the board of directors in such a company. As per the local laws in India, this type of company are recognized as an Indian company making it eligible for benefits like deduction and exemption from taxes.

Advantages of Subsidiary Company Registration in India:
  1. Since the parent company already has its brand name, the Indian subsidiary can also use it; thus, it provides lots of benefits to both the subsidiary and the parent company.
  2. Such companies have limited liabilities making it one of the best forms of company registration.
  3. Provides the parent company with strategic control that it can execute over the wholly-owned subsidiary.
  4. The parent and the subsidiary company can have a common financial system by sharing administrative and other expenses, which can be cost-effective in the long run.
  5. The trade secrets, confidentiality, expertise, operational control, and technical knowledge of the parent company is fully protected and secure in the Incorporation of a wholly-owned subsidiary.

Subsidiary company registration in India is the most popular form of Foreign company registrationin India.
Requisites for registration of Wholly Owned Subsidiary in India:
  1. A minimum of two shareholders or members are required for Incorporation.
  2. At least two directors are required. Out of this, one must be an Indian citizen.
  3. Directors can be shareholders.
  4. No limit on minimum paid-up capital is required.
  5. All the directors in the subsidiary company must have Director Identification Number (DIN).
  6. All the directors must have Digital Signature Certificate (DSC).

Procedure for Subsidiary Company Registration in India:
  1. Application for obtaining Digital Signature Certificate (DSC) by any two directors.
  2. Reservation of the company's name by filling the form with the Registrar of Companies (ROC) to approve the company's proposed name.
  3. Once the ROC approves the name, drafting of Memorandum of Association (MoA) and Articles of Association (AoA) is done, and All the directors apply director's Identification Number (DIN).
  4. An application through Form INC-7 is to be filed for Incorporation of the wholly-owned subsidiary in India.

Once the applicant files all the applications, forms, and documents for Incorporation, they must pay stamp duty and ROC fees online, based on the company's authorized capital. If the ROC verifies all the documents, the Registration Certificate of the Wholly Owned Subsidiary Company is sent through email to the applicant.
Certain Post Incorporation formalities are also required to be done by Subsidiary Company in India, like opening a bank account, bringing share subscription money in the bank account, applying for GST registration, RBI and ROC compliance relating to sharing subscription money received in India, which is considered as FDI.
Documentation Required for Incorporation of Wholly-owned subsidiary:
  1. Address proof of the office: Rent agreement, latest electricity bill or any other equivalent document.
  2. Permanent Account Number (PAN) for the Indian nationals.
  3. Address proof such as electricity bill, bank statements, rent agreement, telephone bill etc.
  4. Photo identity proof such as driving license, AADHAAR card, passport etc.
  5. For Foreign Nationals: 
  6. Passport
  7. Photo Identity Proof certified by the Indian consulate, such as any government license, document.
  8. Address proof containing the full name, date of birth and photo certified by the Indian consulate, such as bank statement, ID, electricity bill etc.

To incorporate a wholly owned subsidiary in India a foreign company must carry out the aforementioned procedure without a hitch. However, since the Indian subcontinent has become a hotspot for growing and expanding businesses and making an investment, the ease of in-laws and procedures have given the foreign companies and investors ample chances in setting up business in India.

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Created on Aug 24th 2021 04:46. Viewed 290 times.


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