Did you know that establishing a wholly owned subsidiary setup in India allows foreign companies to retain complete control over their Indian operations while limiting liability to the invested capital?
The process of foreign company incorporation in India involves several critical steps that require careful planning. From private limited company registration to understanding the Indian company registration process, businesses must navigate a complex regulatory framework. A wholly owned subsidiary setup offers significant advantages over other entry options, especially for organisations planning long-term expansion in the Indian market.
This comprehensive guide explains each step involved in setting up a wholly owned subsidiary in India, covering legal requirements, documentation, and initial compliance obligations. Whether you are a multinational corporation or a growing enterprise, understanding this process will help you avoid delays and ensure a smooth market entry.
1. Minimum shareholders & Director
Statutory Requirements – To incorporate a wholly owned subsidiary setup in India, a minimum of two (2) shareholders are required for a Subsidiary or Private Limited Company. In the case of a wholly owned subsidiary, the holding company typically holds 99.99% of the shares, while 0.1% is held by a nominee.
Additionally, a minimum of two directors must be appointed on the Board. As per the Indian Companies Act, 2013, every company, including a wholly owned subsidiary set up in India, must have at least one resident director on the board who resides in India for a minimum of 182 days during a calendar year. The resident director may be an Indian or foreign citizen.
2. Name Availability- Spice + form Part A (Reserve Unique Name for the proposed Company)
- Board Resolution from Holding Company
- Certificate of Registration and bye-laws.
Note: All the above documents for foreign citizens and non-residents required for the wholly owned subsidiary setup in India should be notarised, consularized, or apostilled by the competent authority, including the documents mentioned in Points 3 and 4.
3. Digital Signature Certificate
As per the Indian Companies Act, all incorporation applications must be filed online with the digital signatures of the proposed Director.
All incorporation documents to be filed online with the Digital Signatures of Directors and Promoters
ID proofs of promoters/directors; any one of the following:
Driving License/Passport//Voter ID/Adhar Card
(A passport is mandatory for foreign nationals.)
Address proof of any one of the following:
Bank statement/mobile bill/telephone bill/electricity bill(utility bill should not older than two (2) months)
4. Incorporation application -SPICE form Part B, INC-35, and AGILE‐PRO-S
The application is filed online by the digital signature of the director who has an income tax PAN, which includes the following documents.
- Memorandum and Articles of Association(MOA & AOA)
- Main objects(business activity) to be given in Memorandum
- Address/ID Proofs of Directors and Promoters
- DIR 2(consent of directors)
- INC 9(declaration of promoters)
- MOA and AOA subscribers’ sheets
- Undertakings for not having an Indian Income Tax number
5. Registered office
Form INC 22 to be filed online for the registered office documents
- NOC(No Objection certificate) of the owner of the premises
- Latest Utility Bill (not older than 2 months)
- Rent Deed/Lease Deed
- Photograph of any one Director at the registered address/premises
6. Capital requirement
SPICE form Part B -Proposed authorised and paid up capital to be mentioned in the incorporation application.
There is no minimum capital requirement in India; however, a wholly owned subsidiary in India or a Private Limited Company is generally incorporated with an initial capital of around INR 1,00,000 (USD 1,500).
As capital to be remitted from the holding company to the Indian company bank account.
7. Company incorporation
Once the application file is received, it takes 3-5 working days to scrutinise the documents. If the RoC(Registrar of Companies) is satisfied with the application, the issue
Certificate of incorporation issued by the ROC(Registrar of Companies) with Corporate Identity Number (CIN).
8. Bank account opening
Once a wholly owned subsidiary set up in India or a Private Limited Company is incorporated, the company can proceed to open its Indian bank account.
Submit documents to the bank to activate the account.
- Certificate of incorporation issued by ROC
- MOA
- AOA
- Directors’ Address/id proofs
9. Capital Compliance
Once the Bank account is activated, then, as per Indian laws, the following capital compliance with RoC, along with proof of capital transfer, is required.
- Form INC 20A, to be filed with the ROC, with the bank statement, i.e., proof of capital deposit
- Form FC-TRS, to be filed with RBI(Reserve Bank of India) for share issuance against FDI(Foreign Direct Investment by foreign resident/Company in India.
10. GST/VAT and other applicable registrations
Once a Company has a bank account and done capital compliance, it can start the business operations in India by having the following application registration and licenses.
- GST/VAT Registration
- Shop & Establishment License
- Professional Tax etc.
Corporate Legit provides India Entry services with a Company Setup Package with the following services:
Incorporation of the Company & Post-incorporation compliances.
Including the following services:
- Digital Signature (DSC)
- Director Identification Number (DIN)
- Name Approval of Company
- Drafting of Memorandum of Association (MOA)
- Drafting of Articles of Association (AOA)
- Professional Certification By CA/CS /Lawyer
- Issue of Certificate of Incorporation
- Company e-PAN Card
- Company e-TAN Card
- Bank A/c Opening Support
- GST/VAT Registration
- Shops & Establishment Registration (if applicable)
- First Board Meeting -Compliance
- Issue of Shares
- INC 20A Filing (Declaration of Commencement)
- Assistance in Inward Remittance of Capital
- FDI(Foreign Direct Investment) Declaration to Bank
- Preparation of FC GPR (capital reporting)
- Filing of FC-GPR to RBI (Reserve Bank of India)
- Import Export Code Registration, if applicable
- Professional Tax Registration(if applicable)
- Employees Provident Fund Registration
- Employees’ State Insurance Registration
Conclusion
Establishing a wholly owned subsidiary setup in India is a strategic move for foreign companies seeking full operational control while limiting liability to the invested capital. The process involves meeting essential statutory requirements, including appointing at least two directors (one being a resident director) and preparing duly authenticated documents from the parent company.
The incorporation journey progresses in a structured manner, starting with name approval and company structuring, followed by obtaining DSCs and DINs, drafting incorporation documents, filing the SPICe+ application, and receiving the Certificate of Incorporation. The overall timeline may vary depending on documentation readiness and regulatory approvals.
Post-incorporation, the subsidiary must complete initial compliance obligations such as opening a corporate bank account, capital infusion, and registrations for PAN, TAN, GST, EPFO, and ESIC, along with timely FEMA and RBI reporting to avoid penalties.
Given the complexity of legal and regulatory requirements, foreign companies benefit from careful planning and expert guidance. With its flexibility, limited liability, and long-term growth advantages, a wholly owned subsidiary remains one of the most effective entry routes into India’s market. Corporate Legit supports foreign businesses throughout this process, ensuring a smooth and compliant company setup in India.
FAQs: Frequently Asked Questions
1. What is a wholly owned subsidiary in India?
A wholly owned subsidiary in India is a company fully owned by a foreign parent company. It allows the foreign company to retain complete operational control while limiting liability to the invested capital. This structure is often preferred for long-term business operations in India.
2. How long does it take to set up a wholly owned subsidiary in India?
The incorporation process typically takes 3 – 5 working days for document scrutiny by the Registrar of Companies (RoC), though the overall setup, including bank account opening, capital infusion, and initial registrations, may take 4 – 6 weeks, depending on documentation and regulatory approvals.
3. What are the minimum requirements for directors and shareholders?
To incorporate a wholly owned subsidiary in India:
- Minimum two shareholders (the foreign holding company usually holds 99.99% shares, and 0.1% by a nominee)
- Minimum two directors, including at least one resident director who resides in India for a minimum of 182 days per year
4. What post-incorporation registrations are required?
After incorporation, a wholly owned subsidiary must complete:
- PAN and TAN registration
- GST/VAT registration
- Shop & Establishment License (if applicable)
- EPFO and ESIC registration
- Bank account activation and capital compliance filings with RoC and RBI
5. What are the advantages of a wholly owned subsidiary for foreign companies?
- Full control over Indian operations
- Limited liability to invested capital
- Eligibility for all government incentives and tax benefits
- Easier long-term market expansion compared to branch offices or liaison offices.