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Incorporation of a Wholly Owned Subsidiary (WOS) under Companies Act, 2013

Written By

Sanmita Poojari

Published on

September 5,
2024

Last updated on

February 10, 2025
12:05

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Establishing a wholly owned subsidiary (WOS) in India under the Companies Act, 2013, involves several key steps. Initially, the parent company must pass a resolution authorizing the WOS setup and propose potential names. It’s essential to determine if any approvals are required for receiving Foreign Direct Investment (FDI). The WOS must have at least two directors, one of whom is an Indian resident, and two shareholders, with one acting as a nominee on behalf of the holding company. The incorporation process includes obtaining Digital Signature Certificates (DSC) for all directors, securing name approval through the SPICe+ form, and filing the necessary incorporation documents with the Ministry of Corporate Affairs. Post-incorporation, the WOS must conduct its first board meeting within 30 days, appoint an auditor, and file a declaration of business commencement. Adhering to these procedures ensures compliance with Indian regulations and facilitates smooth business operations.

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A Wholly Owned Subsidiary (WOS) is a company whose entire share capital is held by another company, known as the holding or parent company. The process of incorporating a wholly-owned subsidiary in India is governed by the Companies Act, 2013. The application is processed by the Central Registration Centre (CRC), Ministry of Corporate Affairs.

Prerequisites for setting up a WOS (Private Company) in India

Holding Company to pass a resolution authorising the setup of a WOS in India and identifying the proposed name(s); paid up capital and authorised signatories / nominees of the WOS
Check if RBI/Government approval is required for receiving Foreign Direct Investment (FDI) Identify minimum 2 directors, 1 of whom shall be a Resident Director
Identify an Authorised Representative on behalf of Holding Company to sign documents to be submitted for incorporation
Identify a Nominee Shareholder of the Holding Company who will hold minimum shares in the WOS on behalf of the Holding Company

Note: The Authorised Representative and Nominee Shareholder cannot be the same person

About the Author

Sanmita Poojari

Senior Associate | Compliance | sanmita.p@treelife.in

A compliance expert with a strong foundation in corporate legal and secretarial practices. Excels in corporate governance, regulatory filings, and advisory services on legal and financial matters, ensuring seamless corporate law compliance for clients.