Wholly Owned Subsidiary Company

Wholly Owned Subsidiary Company of a Foreign Company in India is one of the ways for a Foreign Company to enter and undertake business in India.

Topics Covered –

What is Wholly-Owned Subsidiary Company of a Foreign Company?

As the name suggests, a Wholly-Owned Subsidiary Company of a Foreign Company in India is a Company whose 100% shares or capital is held by the Foreign Company. The company which is owned is called Subsidiary Company and the company which owns the subsidiary company is called Parent Company or Holding Company. It can be formed as any kind of body corporates including private Limited Company and Unlimited Liability Company.

What are the Key Features of Wholly-Owned Subsidiary Company of Foreign Company?

Wholly-Owned Subsidiary Companies are permitted to undertake any kind of business such as Manufacturing, Marketing or Services.
Governing Laws:
- The Companies Act, 2013
- The Foreign Exchange Management Act, 1999
No prior consent/approval of Reserve Bank of India is required.
Taxation Laws treat them as domestic company thus they are required to pay taxes and they can also claim exemptions, deductions or any other benefits applicable on any other Indian Company.
Wholly-Owned Subsidiary Company can raise funds by way of issuing shares or through loans.

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What are the benefits of Wholly-Owned Subsidiary Company of Foreign Company?

It helps to create and maintain a Goodwill or Brand of the parent company in the country of subsidiary company.
Parents Company can guide, advice, manage and support the subsidiary company.
Parent Company can share its resources including funds with the subsidiary company.
Subsidiary Company opens new opportunities and market to the parent company for exporting its products and services in India.
Parent Companies have full and absolute control and management over the affairs of Subsidiary Companies.

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What are the documents required from Foreign Company?

From Foreign Company

Registered Address Proof
Notarized Copy/ Apostille Copy of Resolution of Foreign Company providing the name of the authorized representative and the number of subscribed shares by them
Notarized Copy/ Apostille Copy of the Charter of the Foreign Company
in case Authorized Representative is not a resident of India, Notarized Copy/ Apostille Copy if Identity Proof of authorized representative
Name and details of One Indian Resident Director
Name of the Nominee of Wholly-Owned Subsidiary Company

From Foreign National

Passport
Registered Address Proof
Identity Proof
Photograph

From Indian Citizen

PAN Card
Registered Address Proof
Identity Proof
Photograph

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How to Incorporate a Wholly-Owned Subsidiary Company of a Foreign Company?

1. Obtain DSC for Subscriber

The first step is to obtain the Digital Signature Certificate for the Authorized Signatories and First Directors of the Company of whose DSC will be required for the Incorporation Process.

Documents required for DSC

Identity Proof

- Copy of PAN for Indian National
- Copy of Passport for Foreign National

Resident Address Proof – Utility Bills (not older than 2 months)
Passport Size Photograph
Resident permits for foreigners (if residing in India)

All the documents required from foreign nationals and non-residents should be notarized by competent authority.

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2. Choose the name of the Company

The Applicant Company must choose the name of the company and it shall consider the following points while incorporating a wholly-owned subsidiary Company –

The name of the wholly owned subsidiary company can be the same name of the foreign company by using the word India in the name.
It can use the registered trademark of the foreign company for its incorporation.

**In both the cases, No Objection Certificate is required from the foreign company.

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3. Apply for Name Approval – Form SPICe + (Part A)

Once the name of the company is chosen, the next step is to apply for the reservation of the Company’s name by filing part A of the Form SPICe+ with the Ministry of Corporate Affairs.

A foreign Company is required to fill these details in the Name Reservation Application –

Type of Company
Class of Company
Category
Industrial Activity
Description of Industrial Company
Proposed Name of the Company

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4. File Incorporation Form – Form SPICe+ Part B

When the name of the applicant foreign company is approved then the company shall file the Part B of the SPICe+ Form to incorporate the Wholly-Owned Subsidiary Company of Foreign Company with the ROC within 20 days from the date of name approval.

Part B of SPICe+ Form is filed for following Services –

Company Incorporation
Director’s Identification Number (DIN)
Permanent Account Number (PAN)
Tax Deduction and Collection Account Number (TAN)
Goods and Services Tax Identification Number (GSTIN)
Opening of Bank Account
Employee Provident Fund Organization (EPFO) Registration
Employee’s State Insurance Corporation (ESIC) Registration
Profession Tax Registration (only in case of Maharashtra and Karnataka)

Attachments with Form SPICe+ Part B

E-MOA
E-AOA
AGILE-PRO
INC-9

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5. Certificate of Incorporation

Thereafter, if the ROC is satisfied with the application then it shall issue the certificate of incorporation to the Company.

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6. Post Incorporation Compliances

The Company is required to file the Form 20-A with the ROC to declare the commencement of business.
Moreover, as per the FEMA guidelines, the Company is required to file FCGPR with the Reserve Bank of India (RBI) within 30 days from the date of allotment of shares.
The Company has to issue the share certificates to its subscribers.

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Conclusion

Foreign Company can own an Indian Company by owning 100% of the shares. Start your wholly owned subsidiary company of foreign company under the experts’ guidance.

Get Assistance from your Trustworthy Advisor Manthan Experts to start your Foreign Company in India.

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