How to Set Up a Wholly Owned Subsidiary (WOS) in India: A Step-by-Step Guide to Legal & Regulatory Roadmap

How to Set Up a Wholly Owned Subsidiary (WOS) in India: A Step-by-Step Guide to Legal & Regulatory Roadmap

How to Register a Wholly Owned Subsidiary in India ?

Any foreign company planning to enter the Indian market by setting up a Wholly Owned Subsidiary (WOS) is one of the most popular and flexible business structures. It is one of the widely used structure used by most of the foreign entity to start your business in India.

A Wholly Owned Subsidiary is an Indian company that is 100% owned by a foreign parent company or any combination of group company, It is treated as a separate legal entity under the Companies Act, 2013 and allows foreign investors to conduct business, hire employees, sign contracts, raise invoices, and earn revenue in India.

Incorporating a Indian company has a registration process which involves four major stages , each stage is mandatory and make the Indian company ready to carry out India operations:

1. Prepare and legalize foreign company documents.
2. Register the company through the Ministry of Corporate Affairs (MCA).
3. Obtain all mandatory tax and regulatory registrations.
4. Complete RBI reporting after receiving foreign investment.

If the required documents are ready, a Wholly Owned Subsidiary can generally be incorporated within 2 to 4 weeks’ timeline.

What is a Wholly Owned Subsidiary (WOS) in India?

A Wholly Owned Subsidiary (WOS) is an Indian private limited company where 100% of the shares are held by a foreign company. It’s as good as a Indian company and it can avail all benefits of a Indian company withing the permissible FDI limits prescribed by the Reserve Bank of India.

Unlike a Branch Office or Liaison Office, a WOS can carry out commercial business activities, generate revenue, hire employees, sign contracts, own assets, import and export goods, and receive foreign investment.

Since it is an Indian company, it enjoys greater operational flexibility while maintaining the protection of a separate legal entity.

Step 1: Prepare and Legalize the Required Documents

Prepare the Board Resolution of Investment in Indian company, Certificate of Incorporation of parent company, Memorandum and Articles of Association of parent company, passport copies of directors, address proofs of proposed directors, and document of proposed registered office proof.

Documents from Hague Convention countries must be apostilled. Documents from non-Hague countries must be legalized through the Indian Embassy or Consulate.

Step 2: Obtain Digital Signature Certificates (DSC) and Reserve the Company Name

All proposed directors must obtain a Class-3 Digital Signature Certificate (DSC). Apply for company name approval through SPICe+ Part A. If using the foreign parent's brand name, submit the necessary authorization letter or board resolution or No Objection certificate from the parent company to use the name in India.

Step 3: Register the Company Through SPICe+ Part B

The SPICe+ Part B application provides incorporation along with DIN, PAN, TAN, EPFO, ESIC, bank account integration, and filing of e-MOA and e-AOA. After approval, the MCA issues the Certificate of Incorporation. Filling this application required all the document mentioned above duly notarized or apostilled in the home country , if the country has signed hauge convention then notarization is enough otherwise the documents shall be certified by Indian embassy in the home country.

Step 4: Complete Post-Incorporation Compliance

Open the company's bank account and receive the foreign investment. Obtain the Foreign Inward Remittance Certificate (FIRC), allot shares, file Form FC-GPR with RBI through the RBI portal, and submit Form INC-20A before commencing business.

Being a foreign company it’s important to report the foreign investment done by the company in its Indian subsidiary , based on the submission RBI allots a Unique Identification Number and this number is important with respect to any further capital increase , repatriation of profits to the parent company. Hence complying with this is mandatory.

The Remittance from parent company shall clearly specify the purpose of transfer of the money , it shall be clearly mentioned that it’s for the purpose of share capital of Indian subsidiary.

Laws Governing WOS in India

The main laws include the Companies Act, 2013, FEMA, 1999, the Income Tax Act, 1961, and the GST Act, 2017.

Companies Act, 2013

This law regulates:

1. Company incorporation
2. Directors
3. Shareholders
4. Board meetings
5. Annual compliance
6. Financial reporting

Foreign Exchange Management Act (FEMA), 1999

FEMA regulates:

1. Foreign Direct Investment (FDI)
2. Capital remittance
3. RBI reporting
4. Profit repatriation
5. Overseas transactions

Income Tax Act, 1961

This governs:

1. Corporate income tax
2. Transfer pricing
3. Withholding tax
4. Double Taxation Avoidance Agreements (DTAA)

Goods and Services Tax (GST)

GST applies to:

1. Supply of Good and services
2. Import and export transactions
3. Input tax credit

Best Practices

Prepare documents carefully, ensure proper legalization, maintain a valid registered office, complete RBI filings on time, and seek professional guidance to avoid delays.

Why Choose 3S Business Advisors?

3S Business Advisors assists foreign companies with India entry strategy, WOS incorporation, RBI and FEMA compliance, accounting, taxation, payroll, HR, and ongoing corporate compliance.

Frequently Asked Questions

Q. How long does incorporation take?

A. Wholly Owned Subsidiary in India generally takes 2–4 weeks to incorporate, provided all required documents are complete and properly notarized, apostilled, or legalized. The timeline may vary depending on the foreign parent company's documentation, name approval, MCA processing, and post-incorporation requirements.

Q. Can a foreign company own 100%?

A. Yes. A foreign company can own 100% of an Indian company as a Wholly Owned Subsidiary, provided the proposed business activity is permitted under India's Foreign Direct Investment (FDI) policy. Certain sectors allow 100% FDI under the automatic route, while others may have specific conditions or require government approval.

Q. Is RBI approval always required?

A. RBI approval is not always required to establish a WOS in India. If the proposed investment falls under the permitted FDI route and sectoral conditions, the investment can generally be made under the automatic route. However, the foreign investment must be reported to the Reserve Bank of India (RBI) through the prescribed reporting process after the shares are issued.

Q. Is there a minimum capital? No statutory minimum paid-up capital.

A. There is no general statutory minimum paid-up capital requirement for incorporating a private limited company as a Wholly Owned Subsidiary in India. However, the foreign parent company should invest sufficient capital to support the proposed business operations and comply with applicable FDI and sector-specific requirements.

Q. Can a WOS hire employees?

A. Yes. A Wholly Owned Subsidiary incorporated in India is a separate Indian legal entity and can hire employees, appoint directors, enter into employment contracts, establish payroll, and comply with applicable employment, tax, EPFO, ESIC, and other labour regulations.

Q. Can profits be repatriated? Yes, subject to tax and FEMA compliance

A. Yes. Profits earned by an Indian Wholly Owned Subsidiary can generally be repatriated to the foreign parent company, subject to applicable corporate taxes, dividend distribution requirements, withholding tax, FEMA regulations, and RBI guidelines. The Indian subsidiary must complete the required tax and regulatory compliances before repatriating funds.