WHOLLY OWNED SUBSIDIARY COMPANY IN INDIA
WHOLLY OWNED SUBSIDIARY COMPANY IN INDIA – A COMPLETE GUIDE
Thinking of expanding your business into India but want complete control over operations? A wholly owned subsidiary in India might be exactly what you’re looking for. India has become one of the most attractive destinations for foreign companies due to its massive consumer base, skilled workforce, and business-friendly reforms. Setting up a wholly owned subsidiary allows foreign companies to enter the Indian market confidently while retaining 100% ownership.
In simple words, it’s like planting your own tree in a new land—you control how it grows, how it’s nurtured, and how fruits are harvested.
What is a Wholly Owned Subsidiary?
Meaning and Definition
A wholly owned subsidiary is a company in which 100% of the share capital is held by a foreign parent company. In India, such subsidiaries are usually incorporated as Private Limited Companies under the Companies Act, 2013.
This structure gives foreign investors complete authority over decision-making, strategy, and operations without the involvement of local partners.
Key Characteristics of a Wholly Owned Subsidiary
- 100% ownership by the foreign parent company
- Separate legal entity from the parent company
- Limited liability protection
- Governed by Indian laws and regulations
- Eligible for Foreign Direct Investment (FDI) under automatic or approval route
Difference Between Wholly Owned Subsidiary and Joint Venture
A joint venture is like sharing the steering wheel, whereas a wholly owned subsidiary lets you drive freely.
| Aspect | Wholly Owned Subsidiary | Joint Venture |
|---|---|---|
| Ownership | 100% foreign ownership | Shared ownership |
| Control | Complete control | Shared decision-making |
| Risk | Limited liability | Shared risk |
| Flexibility | High | Comparatively limited |
For businesses that value independence and confidentiality, a wholly owned subsidiary is often the better choice.
Why India is a Preferred Destination for Wholly Owned Subsidiaries
Growing Economy and Market Potential
India is one of the fastest-growing major economies in the world. With a population of over a billion and a rapidly expanding middle class, the market opportunities are enormous. From technology and manufacturing to healthcare and finance, every sector offers promising growth.
Government Policies and FDI Norms
The Indian government has liberalized FDI norms across multiple sectors. Many industries allow 100% FDI under the automatic route, making it easier than ever for foreign companies to set up wholly owned subsidiaries without prior government approval.
Benefits of Setting up a Wholly Owned Subsidiary in India
100% Ownership and Control
The biggest advantage? Absolute control. You make the rules, set the vision, and steer the business exactly the way you want—no compromises.
Limited Liability Protection
The subsidiary is a separate legal entity. This means the liability of the parent company is limited to its investment, protecting it from unnecessary risks.
Separate Legal Entity
A wholly owned subsidiary can own property, enter contracts, sue or be sued independently. This legal independence adds credibility and operational freedom.
Ease of Fund Raising
Being an Indian company, a wholly owned subsidiary can raise funds locally through equity, debt, or loans, subject to regulatory norms.
Tax and Operational Advantages
India offers various tax incentives, double taxation avoidance agreements (DTAA), and cost-efficient operations, making it financially attractive for foreign investors.
Eligibility Criteria for Setting up a Wholly Owned Subsidiary
To register a wholly owned subsidiary in India, the following basic criteria must be met:
- Minimum two directors (at least one must be an Indian resident)
- Minimum two shareholders (foreign parent can hold 100% shares)
- Registered office address in India
- Compliance with FDI guidelines
Registration Process of a Wholly Owned Subsidiary
Step-by-Step Registration Process
The registration process is systematic and mostly digital, handled through the Ministry of Corporate Affairs (MCA).
Name Approval
The first step is applying for name approval through the MCA portal. The proposed name must be unique and comply with naming guidelines.
Incorporation with MCA
Once the name is approved, incorporation documents such as MOA, AOA, and SPICe+ forms are filed. Upon approval, the Certificate of Incorporation (COI) is issued.
PAN, TAN and Bank Account
After incorporation, PAN, TAN, and a company bank account are obtained. The company is now legally ready to operate in India.
Documents Required for Wholly Owned Subsidiary Registration
Documents of Foreign Parent Company
- Certificate of Incorporation
- Memorandum & Articles of Association
- Board Resolution approving Indian subsidiary
- Identity and address proof of authorized signatory
(All documents must be notarized and apostilled)
Documents of Directors
- Passport copy
- Address proof
- Passport-size photographs
- DIN (Director Identification Number)
Registered Office Documents
- Lease deed or ownership proof
- Utility bill (not older than 2 months)
- No Objection Certificate (NOC) from owner
Compliance Requirements for a Wholly Owned Subsidiary
Annual ROC Compliances
- Annual Return (MGT-7)
- Financial Statements (AOC-4)
- Statutory Audit
FEMA and RBI Compliances
- Reporting of FDI through FC-GPR
- Compliance with RBI guidelines
- Filing with Authorized Dealer Bank
Tax and GST Compliances
- Income Tax Returns
- GST registration and returns (if applicable)
- TDS compliances
Missing compliances can attract penalties, so timely filing is crucial.
Post-Incorporation Compliances
After incorporation, companies must:
- Appoint statutory auditor
- Open bank account
- Issue share certificates
- File FDI reporting within prescribed timelines
Think of this phase as setting the foundation strong before scaling operations.
Challenges of Running a Wholly Owned Subsidiary in India
While India offers vast opportunities, challenges like regulatory complexity, cultural differences, and compliance burden can arise. However, with the right planning and professional support, these challenges become manageable stepping stones rather than roadblocks.
How Professional Assistance Helps in Smooth Setup
Professional consultants help with:
- End-to-end registration
- FDI and FEMA compliance
- Tax planning and filings
- Ongoing corporate compliance
This allows foreign companies to focus on growth while experts handle the legal maze.
Conclusion
Setting up a wholly owned subsidiary in India is one of the most effective ways for foreign companies to establish a strong and independent presence in the Indian market. With 100% ownership, operational flexibility, and access to a booming economy, this structure offers long-term strategic advantages. While compliance and regulatory requirements may seem complex, proper guidance ensures a smooth and successful business journey in India.
FAQs
Q1. Can a foreign company own 100% of an Indian subsidiary?
Yes, subject to FDI guidelines, many sectors allow 100% foreign ownership under the automatic route.
Q2. How long does it take to register a wholly owned subsidiary in India?
Typically, it takes 10–15 working days, depending on document readiness and approvals.
Q3. Is GST registration mandatory for a wholly owned subsidiary?
GST registration is mandatory only if the company meets the applicability criteria under GST law.
Q4. Can a wholly owned subsidiary repatriate profits to its parent company?
Yes, profits can be repatriated after payment of applicable taxes and compliance with FEMA norms.
Q5. Is a resident Indian director mandatory?
Yes, at least one director must be a resident of India as per the Companies Act, 2013.
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