Foreign Wholly Owned Subsidiary
Foreign Wholly Owned Subsidiary (WOS)
In today’s globalized economy, businesses often seek opportunities in emerging markets to expand their operations and increase their market share. India, with its vast consumer base and growing economy, has become an attractive destination for foreign investors. One of the most popular structures for foreign companies looking to establish a presence in India is through a Foreign Wholly Owned Subsidiary (WOS).
This article delves into the intricacies of Foreign Wholly Owned Subsidiary registration in India, covering its benefits, eligibility criteria, requirements, and detailed procedures.
What is a Foreign Wholly Owned Subsidiary?
A Foreign Wholly Owned Subsidiary (WOS) is a company incorporated in India that is fully owned by a foreign company.
This structure allows foreign investors to retain complete control over their Indian operations while benefiting from local market advantages.
The subsidiary operates as a separate legal entity, providing the parent company with limited liability and other legal protections.
Benefits of Foreign Wholly Owned Subsidiary
Complete Control: As a wholly owned subsidiary, the foreign parent company retains full ownership and control over the operations, decision-making, and profit repatriation.
Limited Liability: The subsidiary is treated as a separate legal entity, meaning the parent company’s liability is limited to its investment in the subsidiary.
Market Penetration: Establishing a subsidiary enables foreign companies to enter the Indian market effectively and adapt to local consumer preferences.
Access to Local Resources: Subsidiaries can take advantage of local resources, including talent, suppliers, and distribution networks.
Regulatory Compliance: Operating as a subsidiary allows businesses to comply with local regulations more easily than other structures, such as branch offices.
Easier Funding: Subsidiaries can access local financing options, including bank loans and government grants.
Eligibility Criteria to Register a Foreign Wholly Owned Subsidiary in India
To register a Foreign Wholly Owned Subsidiary in India, certain eligibility criteria must be met:
Foreign Company: The parent company must be a foreign entity, registered and operating outside India.
Business Activity: The subsidiary should engage in activities permissible under the Foreign Exchange Management Act (FEMA) and the Reserve Bank of India (RBI) guidelines.
Minimum Capital Requirement: The subsidiary must meet the minimum capital requirements set by the government, typically ranging from ₹1 lakh to ₹5 lakh, depending on the nature of the business.
Requirements for Registration
Name of the Subsidiary: The proposed name must comply with the guidelines set by the Ministry of Corporate Affairs (MCA) and should not be similar to existing companies.
Registered Office: The subsidiary must have a registered office in India, which will serve as its official address.
Director Requirements: At least one director of the subsidiary must be a resident of India.
Bank Account: A bank account must be opened in the subsidiary’s name to facilitate transactions.
Business Plan: A detailed business plan outlining the proposed activities, financial projections, and market analysis is often required.
Documents for the Registration of Foreign Wholly Owned Subsidiary in India
The following documents are typically required for the registration process:
Certificate of Incorporation of the Parent Company: Proof of the foreign company’s existence and registration.
Memorandum and Articles of Association: These documents outline the company’s objectives, rules, and regulations.
Board Resolution: A resolution from the parent company’s board of directors approving the establishment of the subsidiary.
Proof of Identity and Address of Directors: This includes passports, utility bills, or any government-issued identification.
Bank Account Statement: A statement from the bank showing the funds transferred for the subsidiary’s initial capital.
NOC from the Parent Company: A No Objection Certificate from the parent company regarding the establishment of the subsidiary in India.
Step 1: Obtain Digital Signature Certificate (DSC)
All directors of the subsidiary must obtain a Digital Signature Certificate to sign electronic documents.
Step 2: Obtain Director Identification Number (DIN)
Each director must apply for a Director Identification Number, a unique identification number issued by the MCA.
Step 3: Name Reservation
Apply for reservation of the subsidiary’s name through the RUN (Reserve Unique Name) form on the MCA portal.
Step 4: Prepare Documents
Prepare all required documents, including the Memorandum and Articles of Association, ensuring they are duly signed and notarized.
Step 5: File Incorporation Documents
File incorporation documents with the Registrar of Companies (RoC) through the SPICe (Simplified Proforma for Incorporating Company Electronically) form.
Documents typically required:
SPICe form
Memorandum and Articles of Association
Declaration by directors
Proof of registered office
Identity and address proofs of directors
Step 6: Payment of Fees
Pay the prescribed registration fees as per RoC requirements.
Step 7: Issuance of Certificate of Incorporation
Upon verification, the RoC issues a Certificate of Incorporation, officially recognizing the subsidiary as a legal entity.
Step 8: Obtain PAN and TAN
Apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) from the Income Tax Department.
Step 9: Open a Bank Account
Open a bank account in the subsidiary’s name to carry out financial transactions.
Frequently Asked Questions
A company name search ensures that your chosen business name is unique, legally compliant, and not already registered with Companies House UK. It helps you avoid legal disputes, trademark issues, and confusion in the Cardiff business market.
If your desired name is already registered, you’ll need to choose a different name or modify it. Using a taken name could result in rejection by Companies House or potential legal issues. Our experts can help you brainstorm alternative names that are compliant and market-ready.
It’s not advisable to use a name that’s too similar to another company, especially within the same industry. Similar names can confuse customers and risk trademark disputes. A company name search helps you identify these risks early.
For a company name search in Cardiff, you may need:
Proposed company name
Business entity type (Ltd, LLP, Partnership, etc.)
Jurisdiction (Cardiff / UK)
Owner or shareholder details (if applicable)
Business description
A “high probability” result means your proposed company name is likely to be available, but further checks are recommended. This is why our detailed Cardiff Company Name Search Report includes both identical and similar names for clarity.
Certain words are restricted under UK law (e.g., “bank,” “insurance,” “government”). If you want to use them, you’ll need special approval from regulatory bodies. We guide you through this process if your Cardiff business requires such terms