#Wholly-Owned-Subsidiary-in-India


Foreign company can set up a business in India through a Subsidiary company or a Wholly Owned Subsidiary in India. Wholly Owned Subsidiary is also a private limited company with a foreign company has the majority stake in the Indian company. This page will provide information on registering an Indian Company with Foreign company as a shareholder.
Foreign nationals (Individuals) can set up a business in India by registering a private limited company. If you would like to register a company with a foreign individual (Not Company) as shareholder, click here

Basic Requirements for registering a private limited Company with foreign company as shareholders or a wholly owned subsidiary in India:

Shareholders

Minimum two shareholders are required to register a private limited in India. All the shareholders can be foreign nationals or a combination of foreign nationals and Indian nationals. The shareholders can also be a foreign company.

Directors

Minimum of two directors are required out of whom one should be a resident in India. Please note that the requirement is resident of India (Not Indian National), which means a foreign national who is an Indian resident is eligible. Indian Resident means any person who has stayed in India for more than 182 days in the previous calendar year.

The industry

Foreign Direct Investment in India is allowed only in specific Industries. It is very important to note if the industry that you want to operate in is open for investment. Please click here to check the industry in which foreign investment is allowed in India.

Documents Required:

Foreign Company Documents:
  • The registration certificate of the foreign company
  • Memorandum and Articles of the foreign company
  • A board resolution Authorizing the foreign company to invest in India
    note: The person representing the foreign company must be either Director or Employee of the foreign company. At the same time, he/she cannot become shareholder to the indian company at the time of registration. He/She also needs to provide attested documents as provided below.
[all the above documents needs to be self-attested and notarized from notary public]
Foreign Director who will represent the Foreign company:
  • Passport
  • Utility Bill / Drivers License
  • Passport Size photographs of directors (2 each)
[all the above documents needs to be self-attested and notarized from notary public]
Any other Foreign Shareholders or Directors:
  • Passport
  • Utility Bill/ Drivers License
  • Passport Size photographs for shareholder (2 each)
[all the above documents needs to be self-attested and notarized from notary public]
Note:
  1. If the shareholders and Directors are the same one set of document is enough.
  2. Attestation
    1. if the foreign shareholders/directors are from a country which is part of the Commonwealth nations, his signatures, proof of identity and address proof shall be notarized before the Notary (Public) of the country of his origin;
    2. if the foreign shareholders/directors are from a country which is a party to the Hague Apostille Convention, 1961, his signatures, proof of identity and address proof shall be notarized before the Notary (Public) of the country of his origin AND be duly apostillised in accordance with the said Hague Convention;
    3. if the foreign shareholders/directors are from a country outside the Commonwealth and which is not a party to the Hague Apostille Convention, 1961, his signatures, address proof and proof of identity, shall be notarized before the Notary (Public) of such country and the certificate of the Notary (Public) shall be authenticated by a Diplomatic or Consular Officer empowered in this behalf under section 3 of the Diplomatic and Consular Officers (Oaths and Fees) Act, 1948 (40 of 1948) or, where there is no such officer by any of the officials mentioned in section 6 of the Commissioners of Oaths Act, 1889 (52 and 53 Vic.C.10), or in any Act amending the same;
    4. if the foreign shareholders/directors visited in India and intended to register a company in India, then a valid Business Visa is required. Business visa is not required in case of Person is of Indian Origin or Overseas Citizen of India.
Indian Resident Director:
  • Pan copy is mandatory for the Indian Resident
  • ID Proof - Aadhaar/Driver's License/Passport/Voter's ID
  • Address Proof - Bank Statement/Telephone bill
[all the above documents needs to be self-attested and by Bank Manager/Gazetted Officer]
Registered Office documents:
  • Address Proof of place of business (Electricity Bill or Water Bill with full address)
  • No Objection Letter from property owner of the office
  • Rental Agreement

It will take approximately 20 - 25 working days to complete the registration process.
After the company is registered you can open bank account and transfer the share capital to the bank account.


FDI Reporting to Reserve Bank of India:

Every time a foreign individual invests money into India by setting up a business or investing in an existing business, FDI reporting to Foreign Exchange management department or RBI is mandatory.
The foreign shareholder investing in the Indian company must transfer the funds in foreign currency to the Indian Bank account. While doing the bank transfer, you will have to select the purpose code as "Investment" or "Equity investment" or anything similar.
Once the funds reach your Indian company's bank account, your banker will issue a Foreign Inward Remittance Certificate (FIRC) and KYC. With which we can do FC-GPR filing within 30 days to the RBI.


Here is a case scenario:

ABC Inc a company registered in California (USA) wants to set up a subsidiary company in Bangalore (India). Let's say the Indian company name is proposed to be XYZ Technologies Private Limited. Mr John and Mr Jill are the shareholders of the US Company. ABC Inc being a corporate entity must be represented by an individual as signing authority on behalf of ABC Inc.
ABC Inc can be one shareholder and must be represented by an Individual (Lets say Mr John) and the second shareholder can be Mr Jill. Mr John cannot be the second shareholders as he is already a representative of ABC Inc.
ABC Inc wants to hold 99% shares in XYZ Technologies Private Limited and the balance 1% is to be held by Mr Jill who is a director of ABC Inc.
So, the shareholders of XYZ Technologies Private Limited will be

  1. ABC Inc (represented by Mr John) - 99%
  2. Mr Jill - 1%

As per the companies Act, at least one director must be a resident Indian. Let's say they have found an Indian resident who is Mr Ramesh and the other director can be Mr John and Mr Jill.
So, the directors of XYZ Technologies Private Limited will be


  1. Mr John
  2. Mr Jill
  3. Mr Ramesh

P.S - Ramesh is only a director not a shareholder. He does not have any ownership in the company. The owners of the company are still Jack and John.
Let's say the company is registered with a share capital of Rs 1,00,000. The company will open a bank account in the name of the company. Jack will transfer Rs 50,000 and John will transfer 50,000 to the bank account as subscription to the capital.
Only after the capital from the shareholders comes into the bank account, your banker will issue FIRC and RBI reporting will be done.
To know more about the compliances required for a company with foreign shareholders, please check this link.

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