How to setup a Foreign Company In India.

Due to economic revolution and globalization, mostly companies in the world looking to expand their operations through out the Globe. In the recent past due to India Economy booms and Government also open doors to foreign nations company to invest in India, many foreign company comes forward to setting up their business in India.

Wholly owned Subsidiary is one of the business formation where a foreign entity can setup  business in India.

This blogs helps in understanding about the Wholly owned subsidiary(WOS) Registration of foreign company in India

About WOS

When an Entity which is incorporated outside India (i.e Foreign Country), makes 100% Foreign Direct Investment (FDI) as per Indian FDI policy, the Indian company incorporated for this purpose is said to be wholly owned subsidiary of that foreign entity.

Under the current foreign investment policy, a wholly owned subsidiary can be established either under the automatic route, if the conditions specified therein are complied with (specific high priority industries) or obtain an approval from the FIPB.

This is the easy and best method for setup a foreign based Company in India, where entire hold on share capital of a Indian company is hold by Foreign Based Entity.

Key Feature of WOS

  • WOS is regulated by Indian Companies Act, 2013
  • All types of Business Activities are permitted such as manufacturing, marketing, services activity etc subject to FDI Norms.
  • Treated as Domestic Indian Company and Indian Taxation apply and eligible for all exemptions and deduction as applies to Domestic Companies.

Type of WOS

In India, there are two form of company incorporated

  1. Private Limited
  2. Public Limited

Private Limited Company has following characteristics:

  • shareholders’ right to transfer shares is restricted
  • the number of shareholders is limited to 200; and
  • an invitation to the public to subscribe to any shares or debentures is prohibited.
  • Minimum paid up capital is ₹1,00,000.
  • Minimum 2 Director and 2 shareholder, One will be Indian Resident Director.

Public Limited Company has following characteristics:

  • It must have at least seven shareholders.
  • Minimum paid up capital must be ₹5,00,000
  • It must publish a prospectus or file a statement in lieu of a prospectus before it can start transacting business.
  • A public company is required to have at least three directors.

Documents required for Registration/setup of Wholly Owned Subsidiary (WOS).

  1. 3 Passport Size photograph.
  2. PAN CARD (Not mandatory in case of Foreign Director).
  3. Passport (Mandatory for Foreign Director, Must be in English Language and duly apostile).
  4. Address proof (Driving License, Voter ID, Passport, Aadhar Card).
  5. Any one of following (Bank Passbook, Credit Card Statement, Telephone Bill, Electricity Bill).
  6. Proof of Registered office in India-Electricity Bill, Leased deed or Rent Agreement.
  7. If the proposed director is in foreign country then all the documents must be duly apostile by the home country & if director is presently in India then such apostile is not required.

Process required for registration/setup of Wholly Owned Subsidiary (WOS) in India.

  1. Obtaining (Director Identification Number) DIN for all Directors.
  2. Obtaining Digital Signature for all the directors.
  3. Filling Application for Name Reservation for the proposed Company.
  4. Drafting Memorandum & Articles of Association.
  5. Subscription to the Memorandum by the shareholders and appropriate person.
  6. Submission of all the documents to the Concerned Registrar of Companies (ROC).
  7. Receipt of Certificate of Incorporation from the ROC.
  8. Apply for PAN CARD and opening of Bank Account.
  9. Submission of Documents for FDI Compliance after Subscription of Share Capital.