Incorporation of a Wholly Owned Subsidiary (WOS) under Companies Act, 2013
Written By
Sanmita Poojari
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Quick Summary
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.
AI Summary
Incorporating a Wholly Owned Subsidiary (WOS) in India is guided by the Companies Act, 2013, with the application processed through the Central Registration Centre. A WOS is a company whose entire share capital is owned by a parent company. Key prerequisites for setting up a private WOS include passing a resolution by the holding company, ensuring compliance with RBI/Government FDI regulations, appointing a minimum of two directors (one being a Resident Director), and designating an Authorised Representative to oversee the incorporation paperwork. Additionally, a Nominee Shareholder must be identified to hold shares on behalf of the holding company, with stipulations that the Authorised Representative and Nominee Shareholder cannot be the same individual.
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
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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.
We Are Problem Solvers. And Take Accountability.
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