# Wholly Owned Subsidiary in India: Meaning, Examples, Rules

> Source: https://krystal7.com/insights/wholly-owned-subsidiary-in-india
> Publisher: Krystal7 Consultants (Krystal7 Innovations Private Limited), Gurugram, India
> Author: CA Nandini
> Published: 10 Aug 2026; updated 14 Nov 2026
> Summary: A wholly owned subsidiary is a company whose entire share capital is held by its parent. Meaning, examples, Companies Act rules and FDI setup in India.

*Written by CA Nandini, Krystal7 Consultants. Last updated 14 November 2026.*

## AI Overview Summary

- A wholly owned subsidiary is a company whose entire share capital is held by one parent and its nominees. Section 2(87) of the Companies Act, 2013 defines a subsidiary, and the Act has no separate definition of a wholly owned one.
- Real examples include the five fully owned subsidiaries of the Reserve Bank of India, NPCI International Payments Limited under NPCI and NSE Clearing Limited under the National Stock Exchange.
- A foreign company can own 100 percent in most sectors on the automatic route. Sector caps, prohibited sectors and the land border rule in Press Note 3 (2020 Series) come first.
- A Private Limited company needs two members and two directors. The parent holds one share through a nominee under section 89, and one director must stay in India for 182 days under section 149(3).
- After incorporation, the shares must be issued within 60 days of receiving the money. Form FC-GPR is due within 30 days of the issue and INC-20A within 180 days of incorporation.

**A wholly owned subsidiary is a company whose entire share capital is held by one parent company, directly or through its nominees. In India it is usually a Private Limited company. Section 2(87) of the Companies Act, 2013 defines a subsidiary, and the Act has no separate definition of a wholly owned one. A foreign company can own 100 percent in most sectors without prior approval. The company still needs two shareholders, two directors and one director who stays in India for 182 days.**

This page explains what a wholly owned subsidiary means, with real examples, as the law stands on 14 Nov 2026. It covers the Companies Act rules, foreign ownership, shareholders, directors, setup, capital, tax and yearly compliance. It then compares a subsidiary with a joint venture, a branch and a liaison office. It closes with a worked example, common mistakes, a checklist and FAQs.

## What is a wholly owned subsidiary?

A wholly owned subsidiary (WOS) is a company in which one parent holds all the shares. The parent is the holding company. No outside investor owns any part of it.

The Companies Act, 2013 defines a subsidiary company in section 2(87). A company is a subsidiary when another company controls the composition of its board. It is also a subsidiary when that company controls more than one half of its total voting power. Section 2(46) defines the holding company. Since the Companies (Amendment) Act, 2017, a holding company includes any body corporate, so a foreign parent qualifies.

The Act uses the words "wholly owned subsidiary" in sections 185, 186, 188 and 233. It does not define them. In practice the term means a subsidiary whose whole share capital sits with the holding company and its nominees. Tax law uses the same idea. Section 70(1)(c) of the Income Tax Act, 2025 keeps a transfer of a capital asset to a wholly owned Indian subsidiary outside capital gains.

| Term | Test | Where it comes from |
|---|---|---|
| Wholly owned subsidiary | The parent and its nominees hold 100 percent of the share capital | Used in sections 185, 186, 188 and 233 of the Companies Act, 2013 |
| Subsidiary company | Another company controls the board composition or more than one half of the total voting power | Section 2(87) |
| Associate company | Another company controls at least 20 percent of the voting power, or takes part in business decisions under an agreement | Section 2(6) |
| Joint venture company | Two or more partners share ownership under an agreement, for example 51:49 | Shareholders' agreement and the articles |

Source: Companies Act, 2013, sections 2(6), 2(46), 2(87), 185, 186, 188 and 233 (text checked 14 Nov 2026).

Our guide to the [holding and subsidiary company test in section 2(87)](/insights/holding-and-subsidiary-company-india-section-2-87) covers the definition in depth.

## What is an example of a wholly owned subsidiary?

The clearest Indian examples come from public institutions, because they publish their group structure. The Reserve Bank of India lists five fully owned subsidiaries on its website.

| Parent | Wholly owned subsidiary | What it does |
|---|---|---|
| Reserve Bank of India | Deposit Insurance and Credit Guarantee Corporation (DICGC) | Insures bank deposits |
| Reserve Bank of India | Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL) | Prints bank notes |
| Reserve Bank of India | Reserve Bank Information Technology Private Limited (ReBIT) | Runs technology and cyber security work for the RBI |
| Reserve Bank of India | Indian Financial Technology and Allied Services (IFTAS) | Provides technology services to banks and the RBI |
| Reserve Bank of India | Reserve Bank Innovation Hub (RBIH) | Supports financial innovation |
| National Payments Corporation of India | NPCI International Payments Limited (NIPL), incorporated 3 Apr 2020 | Takes UPI and RuPay to other countries |
| National Stock Exchange of India | NSE Clearing Limited | Clears and settles trades on the NSE |

Sources: Reserve Bank of India, About Us, Subsidiaries; NPCI International Payments Limited; NSE group companies page (all read 14 Nov 2026).

The cross border example is the one we file most often. A company in the United States forms an Indian Private Limited company. The US parent holds 9,999 shares and a group nominee holds 1 share for it. The Indian company is a wholly owned subsidiary of the US parent.

The status can change. If the parent sells even one share to an outside investor, the company is still a subsidiary but no longer wholly owned.

## How is a wholly owned subsidiary different from a subsidiary?

Every wholly owned subsidiary is a subsidiary. Not every subsidiary is wholly owned. The difference is the share held by outsiders.

| Point | Wholly owned subsidiary | Other subsidiary |
|---|---|---|
| Parent's holding | 100 percent, with nominees | More than half the voting power, or control of the board |
| Outside shareholders | None | Yes, a minority |
| Shareholder decisions | The parent decides alone | The parent must respect minority rights in the Act and the articles |
| Loans from an Indian holding company | Section 185(3)(c) exempts them when used for the principal business | The clause (c) exemption does not apply |
| Merger with the parent | Named in section 233 for the fast track route | Fast track only for the classes the rules prescribe; otherwise a scheme before the NCLT |
| Count of layers | One wholly owned layer is ignored | Counts as a layer |

Source: Companies Act, 2013, sections 185, 186 and 233; Companies (Restriction on Number of Layers) Rules, 2017 (text checked 14 Nov 2026).

## Is a wholly owned subsidiary a separate legal entity?

Yes. A wholly owned subsidiary is a company in its own right. It has its own name, PAN, bank account, contracts, employees and tax return. The parent's liability is limited to any amount unpaid on its shares.

Three points follow from that.

1. The directors owe their duties to the Indian company, even though one parent owns it.
2. The parent cannot treat the subsidiary's bank account as its own. Money moves as share capital, a loan, a dividend or payment for a service.
3. Each payment between the two needs a contract and an arm's length price, because they are related parties.

## What does the Companies Act say about wholly owned subsidiaries?

The Act gives a wholly owned subsidiary a few specific reliefs. Most of them apply between an Indian holding company and its Indian subsidiary.

| Provision | What it says | Why it matters |
|---|---|---|
| Section 187(1), proviso | A company may hold shares in its subsidiary in the name of a nominee, if needed to keep the members above the statutory minimum | This is the legal basis for the nominee shareholder |
| Section 185(3)(c) | A holding company may lend to its wholly owned subsidiary, or guarantee its loan | The subsidiary must use the money for its principal business activities |
| Section 186(3), provisos | The special resolution for loans and investments above the limits does not apply to a wholly owned subsidiary | The company still discloses the loan or investment in its financial statements |
| Section 188(1), last proviso | No shareholder resolution for related party transactions with a wholly owned subsidiary | The subsidiary's accounts must be consolidated and placed before the shareholders |
| Section 233 | A holding company and its wholly owned subsidiary can merge by the fast track route | Members holding 90 percent of the shares and creditors holding nine tenths in value must approve |
| Layers Rules, 2017, rule 2 | A company may not have more than two layers of subsidiaries | One layer made up of wholly owned subsidiaries is not counted |
| Section 2(85) | A holding or subsidiary company can never be a small company | The lighter small company filings and fees are not available |

Sources: Companies Act, 2013, sections 2(85), 185, 186, 187, 188 and 233; Companies (Restriction on Number of Layers) Rules, 2017, G.S.R. 1176(E) of 20 Sep 2017 (text checked 14 Nov 2026).

A foreign parent should read this table with care. Sections 185 and 186 govern loans by Indian companies. A loan from a foreign parent to its Indian subsidiary is an external commercial borrowing under FEMA. Our guide to [loans from a foreign parent](/insights/ecb-loan-from-foreign-parent-india) sets out those rules.

## Can a foreign company own 100 percent of an Indian company?

Yes, in most sectors. Under the automatic route, a foreign company invests without prior government approval and reports after the shares are issued. Manufacturing, IT services, ecommerce marketplaces, single brand retail, renewable energy and medical devices all take 100 percent foreign direct investment (FDI) on that route.

Three checks come first.

1. **Sector cap.** Some sectors stop short of 100 percent on the automatic route. Defence manufacturing allows 74 percent, and private sector banks and scheduled airlines allow 49 percent.
2. **Prohibited sectors.** FDI is not allowed in lottery, gambling and betting, chit funds, Nidhi companies and real estate business. It is also barred in the manufacture of cigars, cigarettes and tobacco substitutes.
3. **Land border rule.** An entity or citizen of China, Pakistan, Bangladesh, Nepal, Bhutan, Myanmar or Afghanistan needs government approval in every sector.

The land border rule looks through the immediate parent. Under Press Note 3 (2020 Series), as amended by Press Note 2 (2026 Series) and S.O. 2174(E) of 1 May 2026, owners from a land border country with more than 10 percent or control bring the investor within the approval rule. Check the whole ownership chain. The country where the parent is registered is not enough.

Our guides to the [FDI automatic route sectors](/insights/fdi-automatic-route-sectors-in-india) and [Press Note 3](/insights/press-note-3-fdi-land-border-countries) give the full lists.

## Why does a wholly owned subsidiary need two shareholders?

Section 3(1)(b) of the Companies Act, 2013 needs two or more persons to form a private company. So a parent that wants 100 percent holds one share through a nominee.

The nominee is the registered holder of that share. The parent keeps the beneficial interest. Section 89 makes both of them declare it.

| Step | Who | Form and time limit |
|---|---|---|
| Declares that it holds the share for the parent | Nominee | Form MGT-4, given to the company |
| Declares its beneficial interest | Parent | Form MGT-5, given to the company |
| Reports the declarations to the Registrar | Company | Form MGT-6, within 30 days of receiving them |

Source: Companies Act, 2013, section 89 (text checked 14 Nov 2026).

A person who misses the section 89 declaration faces a penalty of ₹50,000 plus ₹200 a day, up to ₹5 lakh. On our filings, we prefer a non resident nominee from the parent's group. That keeps every share inside one Form FC-GPR.

Ownership reporting does not stop there. Section 90 asks the company to identify each significant beneficial owner, an individual who holds at least 10 percent indirectly or has significant influence or control. A foreign parent is not exempt. The company files Form BEN-2 within 30 days of receiving the owner's declaration.

Read our guides to the [nominee shareholder](/insights/nominee-shareholder-wholly-owned-subsidiary-india) and [BEN-2 with a foreign parent](/insights/significant-beneficial-owner-ben-2-foreign-parent) for the documents.

## Who can be the directors of a wholly owned subsidiary?

A Private Limited company needs at least two directors. Section 149(3) requires at least one director who stays in India for 182 days or more in the financial year. A company formed during the year applies the test in proportion.

Nationality does not matter. A foreign national living in India can fill the seat. An Indian citizen living abroad cannot, unless that person spends the days in India. A gap attracts a penalty of ₹50,000 plus ₹500 a day, capped at ₹3,00,000 for the company.

Foreign groups usually fill the seat in one of three ways: an Indian employee, a relocated executive or a professional director. The resident director carries full statutory duties and needs the company's records to meet them. Our guide to the [resident director rule](/insights/resident-director-requirement-indian-company) explains the 182 day count.

## How does the parent control a wholly owned subsidiary?

Owning all the shares gives the parent the vote. It does not replace governance. The directors still run the Indian company and answer for it. We ask parents to agree these records before operations begin.

| Decision | Record to agree |
|---|---|
| Appointment of directors | The articles, nomination rights and the appointment process |
| Major spending and borrowing | Approval limits and the matters reserved for the board or the shareholder |
| Banking authority | Signatories, transaction limits and access controls |
| Contracts with the parent | Service, licence, funding or supply agreements |
| Financial oversight | The reporting schedule and access to supporting records |
| Ownership changes | The process for transfers, further issues and new investors |

Write the reserved matters into the articles. Terms kept only in a separate agreement may not bind the company. Our guide to the [memorandum and articles for a foreign owned subsidiary](/insights/memorandum-and-articles-of-association-foreign-subsidiary) lists the clauses. For the monthly reporting pack, see the [subsidiary control and reporting guide](/insights/indian-subsidiary-control-reporting-audit).

## How is a wholly owned subsidiary set up in India?

A foreign parent incorporates the company through SPICe+ on the MCA portal, opens a bank account, sends the capital and reports it to the RBI. The table shows the order we follow.

| Step | What happens | Time limit or our experience |
|---|---|---|
| 1. Documents | The parent's documents and the directors' papers are notarised and apostilled, or consularised, under rule 13(5) | On our filings, about 4 to 5 business days at the client's end |
| 2. Name | SPICe+ Part A reserves the name | ₹1,000 per application; the name stays reserved for 20 days |
| 3. Incorporation | SPICe+ Part B incorporates the company with PAN, TAN and DINs | MCA registration fee is nil up to ₹15 lakh of authorised capital |
| 4. First auditor | The board appoints the first auditor | Within 30 days of registration |
| 5. Bank account | The company opens a current account with an AD Category I bank | On our filings, about 30 calendar days after incorporation |
| 6. Capital | The parent remits the share capital through banking channels | The shares must be issued within 60 days of receipt |
| 7. FC-GPR | The company reports the issue to the RBI on the FIRMS portal | Within 30 days of the issue |
| 8. INC-20A | A director declares that the subscribers have paid for their shares | Within 180 days of incorporation; no business or borrowing before it |

Sources: Companies Act, 2013, sections 10A and 139(6); Companies (Incorporation) Rules, 2014, rules 13 and 38; FEMA 395/2019-RB, regulation 4; Krystal7 filing practice.

Two practice points save time. Video KYC cannot onboard a foreign director who is abroad, so plan the signatory's bank visit early. Krystal7 has a banking partnership with ICICI Bank, and US based signatories can complete KYC at ICICI's New York branch.

Government cost is small. On our 2026 SPICe+ challans for ₹15 lakh of capital, stamp duty, PAN and TAN came to ₹338 in Haryana and ₹2,603 in Delhi. Our [company registration cost calculator](/static/tools/company-registration-cost-calculator.html) runs other states.

This page explains the structure. For the filing itself, see our [foreign company registration service](/services/foreign-subsidiary.html). These guides cover single steps: [apostille and notarisation](/insights/apostille-notarisation-documents-india-company-registration), the [SPICe+ form](/insights/spice-incorporation-spice-plus-guide-2026), the [bank account](/insights/bank-account-for-indian-subsidiary-documents-timeline), the [first auditor](/insights/first-auditor-adt-1-foreign-owned-company) and [INC-20A](/insights/inc-20a-commencement-of-business-foreign-subsidiary).

## How much capital does a wholly owned subsidiary need?

Indian company law sets no minimum paid up capital. The Companies (Amendment) Act, 2015 removed it. Authorised capital is only the ceiling that the memorandum sets on share capital.

Our view is that most foreign subsidiaries should start with exactly ₹15 lakh of authorised capital. The MCA registration fee is nil up to that line. One rupee above it, the subsidiary of a foreign parent pays ₹51,300 on its whole capital, because a subsidiary is never a small company.

Decide how the money comes in before it moves. Share capital needs shares within 60 days and Form FC-GPR within 30 days of the issue. A parent loan is an external commercial borrowing and needs a loan registration number before drawdown. Our guides to [authorised capital](/insights/how-much-authorised-capital-foreign-subsidiary-india) and [government registration fees](/insights/company-registration-fees-india-government-charges) show the numbers.

## How is a wholly owned subsidiary taxed in India?

A wholly owned subsidiary is a domestic company for tax, even when a foreign parent owns it. It pays tax in India on its worldwide income.

| Item | Wholly owned subsidiary | Branch of the foreign company |
|---|---|---|
| Base tax rate | 25 percent with turnover up to ₹400 crore, or 22 percent under the concessional regime | 35 percent |
| Effective rate | About 25.17 percent under the 22 percent regime | 36.40 to 38.22 percent |
| Profit sent to the parent | Dividend, with 20 percent tax withheld under section 207 plus surcharge and cess, or the lower treaty rate | No dividend step; the branch is part of the foreign company |
| Billing the parent for services | Possible as an export of services | Not an export under GST |

Sources: Income Tax Act, 2025, sections 200 and 207; Integrated Goods and Services Tax Act, 2017, section 2(6)(v); rates for tax year 2026-27.

Every transaction with the parent must be at arm's length. The Chartered Accountant's report in Form 3CEB covers each international transaction with a related party, with no minimum value. For FY 2025-26 it was due by 31 Oct 2026. A dividend needs no RBI approval. The company files Form 145, with Form 146 where required, before the bank remits.

Read more on the [corporate tax rate](/insights/corporate-tax-rates-in-india-for-foreign-companies), [Form 3CEB](/insights/form-3ceb-filing-requirement-foreign-founders-india) and [dividends to a foreign parent](/insights/dividend-from-indian-subsidiary-to-foreign-parent).

## Wholly owned subsidiary, joint venture, branch or liaison office?

A foreign company has four common ways to work in India. They differ in ownership, permitted work and tax.

| Question | Wholly owned subsidiary | Joint venture company | Branch office | Liaison office |
|---|---|---|---|---|
| Is it a separate Indian company? | Yes | Yes | No | No |
| Who owns it? | The parent, 100 percent | The partners, as agreed | The foreign company itself | The foreign company itself |
| Approval before starting | None in automatic route sectors | None within the sector cap | AD Category I bank, under FEMA 22(R)/2016-RB | AD Category I bank, under FEMA 22(R)/2016-RB |
| Entry test for the foreign company | None | None | Five years of profit and net worth of USD 100,000 | Three years of profit and net worth of USD 50,000 |
| What it can do | Any lawful activity the sector rules allow | The agreed venture | Eight listed activities; no retail trade | Liaison work only; no income |
| Tax rate | 22 or 25 percent base rate | 22 or 25 percent base rate | 35 percent base rate | No income to tax |
| Yearly certificate to the AD bank | None | None | Annual Activity Certificate by 30 September | Annual Activity Certificate by 30 September |

Sources: FEMA 22(R)/2016-RB and the RBI Master Direction on branch and liaison offices; Income Tax Act, 2025.

A joint venture suits a partner who brings a licence, a market or capital, or a sector with a foreign ownership cap. A branch or liaison office suits a narrow or short mandate. A subsidiary suits a business that will hire, sign contracts and grow in India.

Compare further in our guides to the [joint venture company](/insights/joint-venture-company-india-foreign-partner), the [branch office](/insights/branch-office-in-india-rbi-rules), the [liaison office](/insights/liaison-office-in-india-rbi-rules) and the [employer of record](/insights/employer-of-record-vs-subsidiary-india). For the wider plan, read the [India entry strategy guide](/insights/india-entry-strategy-for-foreign-companies-a-comprehensive-2026-guide).

## What are the advantages and disadvantages of a wholly owned subsidiary?

| Advantages | Disadvantages |
|---|---|
| Full ownership and control, with no partner to consult | A full compliance calendar from the first month |
| A separate legal entity, so the parent's liability stays limited | A statutory audit every year, whatever the size |
| A lower tax rate than a branch | Never a small company, so no lighter filings or fees |
| Freedom to do any activity the sector rules allow | A resident director and a nominee shareholder are needed |
| It can bill the parent and treat the service as an export | Transfer pricing applies to every transaction with the parent |
| Dividends go to the parent without RBI approval | Closing takes time; strike off needs two years without business |

## What compliance does a wholly owned subsidiary carry each year?

Compliance starts with incorporation, not at the first year end. The yearly cycle for a foreign owned Private Limited company looks like this.

| Filing | What it is | Due date |
|---|---|---|
| Statutory audit and AGM | Audited accounts placed before the members | AGM within six months of 31 March; the first AGM within nine months of the first year end |
| AOC-4 | Financial statements filed with the Registrar | Within 30 days of the AGM |
| MGT-7 | Annual return; the shorter MGT-7A is not available to a subsidiary of a foreign company | Within 60 days of the AGM |
| FLA return | Annual return on foreign liabilities and assets to the RBI | 15 July |
| Form 3CEB | Chartered Accountant's report on transactions with the parent | 31 Oct 2026 for FY 2025-26 |
| ITR-6 | Income tax return in a transfer pricing case | 30 Nov 2026 for FY 2025-26 |
| TDS and GST | Monthly deposits and returns | TDS by the 7th; GSTR-1 by the 11th; GSTR-3B by the 20th |
| EDF | Monthly Export Declaration Form for service invoices, from 1 Oct 2026 | Within 30 days after the invoice month |

Sources: Companies Act, 2013, sections 92, 96, 137 and 139; RBI FLA FAQ; Income Tax Act, 2025; FEMA 23(R)/2026-RB.

Our [compliance calendar for foreign owned companies](/insights/compliance-calendar-foreign-owned-company-india-2026-27) lists every date. See also the [statutory audit](/insights/statutory-audit-foreign-owned-indian-subsidiary), [AOC-4 and MGT-7](/insights/aoc-4-mgt-7-annual-filing-foreign-owned-company), the [FLA return](/insights/fla-return-due-date-fy-2025-26) and the [EDF form](/insights/edf-form-export-declaration-form-guide).

## Can a wholly owned subsidiary have its own subsidiaries?

Yes. A company owned by the Indian subsidiary is a step down subsidiary. Two sets of rules apply.

First, FEMA treats the investment as downstream investment, because non residents own the investing company. The new company must meet the FDI route, sector cap and pricing rules. The investing company uses money from abroad or its own internal accruals, not Indian borrowings. It files Form DI with the RBI within 30 days of allotment.

Second, the Companies (Restriction on Number of Layers) Rules, 2017 allow no more than two layers of subsidiaries. One layer made up of wholly owned subsidiaries is not counted. Banks, insurers, systemically important NBFCs and government companies are outside the rule.

Our guide to [downstream investment and Form DI](/insights/downstream-investment-focc-form-di) covers the tests.

## How does a wholly owned subsidiary change, merge or close?

**Bringing in another shareholder.** A new issue or a transfer ends the wholly owned status. A transfer between a resident and a non resident needs Form FC-TRS within 60 days and a price that meets the FEMA pricing rules. Section 71 of the Income Tax Act, 2025 can also withdraw the capital gains relief. It applies to assets moved to the subsidiary when ownership changes within eight years.

**Merging with the parent.** Section 233 lets a holding company and its wholly owned subsidiary merge by the fast track route. The Central Government approves the scheme, not the NCLT. Since 17 Sep 2024, rule 25A(5) lets a foreign holding company merge into its wholly owned Indian subsidiary by the same route. Our guide to [cross border mergers under rule 25A](/insights/inbound-cross-border-merger-india-rule-25a) explains it.

**Closing.** A company with no liabilities and no business in the two preceding financial years can apply for strike off. It files Form STK-2 with a fee of ₹10,000. A solvent company that must return capital uses voluntary liquidation under section 59 of the Insolvency and Bankruptcy Code. See our guide to [closing an Indian subsidiary](/insights/close-indian-subsidiary-strike-off-or-winding-up).

**Moving money back.** Dividends, share transfers, buybacks, service payments and loan repayments are different transactions. Each needs its own company law, tax and FEMA review. The [profit repatriation guide](/insights/repatriation-of-profits-from-india-to-a-foreign-parent-the-2026-strategic-guide) compares them.

## What changed in 2026

1. **Land border ownership.** Press Note 2 (2026 Series) and S.O. 2174(E) of 1 May 2026 set a 10 percent test for land border ownership inside a foreign investor.
2. **Parent loans.** The external commercial borrowing rules were rewritten from 16 Feb 2026. A parent loan still needs a loan registration number before drawdown.
3. **Income tax.** The Income Tax Act, 2025 applies from 1 Apr 2026. The company tax regime sits in section 200 and dividend withholding in section 207.
4. **Service exports.** From 1 Oct 2026, a subsidiary that bills its parent for services files a monthly EDF and must realise the money within nine months.

## Worked example

A Delaware corporation sets up a wholly owned subsidiary in Gurugram, Haryana. The company is incorporated on 1 Dec 2026 with ₹15 lakh of authorised capital.

1. **Shareholding.** The parent subscribes to 9,999 shares of ₹10 each. A group nominee subscribes to 1 share. The nominee signs Form MGT-4 and the parent signs Form MGT-5.
2. **Government cost.** Name reservation costs ₹1,000, PAN and TAN ₹143 and Haryana stamp duty ₹195. The MCA registration fee is nil. The total is ₹1,338.
3. **Resident director.** From 1 Dec 2026 to 31 Mar 2027 there are 121 days. The proportionate requirement is about 60 days of stay in India.
4. **Clock after incorporation.** The dates below follow from the statute.

| Event | Rule | Date in this example |
|---|---|---|
| Incorporation | Certificate of incorporation | 1 Dec 2026 |
| First auditor | Within 30 days of registration | By 31 Dec 2026 |
| Capital received from the parent | Inward remittance to the Indian bank account | 6 Jan 2027 |
| Shares issued | Within 60 days of receipt | By 7 Mar 2027; issued on 20 Jan 2027 |
| Form FC-GPR | Within 30 days of the issue | By 19 Feb 2027 |
| INC-20A | Within 180 days of incorporation | By 30 May 2027 |
| First AGM | Within nine months of the first year end, 31 Mar 2027 | By 31 Dec 2027 |

Sources: Companies Act, 2013, sections 10A, 96, 139(6) and 149(3); FEMA 395/2019-RB; Krystal7 SPICe+ challan, Haryana (14 Aug 2026).

The parent later needs more money in India. The company issues more shares within the ₹15 lakh limit. Each allotment needs its own Form FC-GPR within 30 days.

## Common mistakes

1. **Assuming one shareholder is enough.** Fix: plan the nominee share and the section 89 declarations before filing SPICe+.
2. **Treating the nominee as the owner.** Fix: file Forms MGT-4, MGT-5 and MGT-6 so the records show the parent's beneficial interest.
3. **Checking only the parent's country for the land border rule.** Fix: trace owners above 10 percent through the whole chain.
4. **Appointing a resident director who will not be in India.** Fix: count the 182 days, or the proportionate days in the first year.
5. **Sending money before deciding what it is.** Fix: agree whether it is share capital, a loan or a service payment, then remit.
6. **Missing the 30 day FC-GPR clock.** Fix: diary it from the allotment date, not the remittance date.
7. **Starting business before INC-20A.** Fix: file INC-20A as soon as the subscription money is in the bank.
8. **No agreement for charges between parent and subsidiary.** Fix: sign the service or licence agreement first and price it at arm's length.
9. **Believing nothing is due until the first year end.** Fix: follow the compliance calendar from the month of incorporation.
10. **Choosing a branch to avoid company filings.** Fix: compare the 35 percent branch tax rate and the limits on branch activities first.

## Checklist for a wholly owned subsidiary

1. Confirm the sector allows 100 percent FDI on the automatic route.
2. Trace the parent's owners for the land border rule.
3. Choose the nominee shareholder and prepare Forms MGT-4 and MGT-5.
4. Appoint at least two directors, with one who meets the 182 day stay.
5. Fix the registered office state and the authorised capital.
6. Notarise and apostille the parent's documents.
7. Reserve the name and file SPICe+ Part B.
8. Appoint the first auditor within 30 days.
9. Open the bank account and remit the share capital.
10. Issue the shares within 60 days and file Form FC-GPR within 30 days of the issue.
11. File INC-20A within 180 days and before starting business.
12. Identify the significant beneficial owners and file Form BEN-2.
13. Sign the agreements between parent and subsidiary.
14. Set up the monthly TDS and GST calendar and the yearly filings.

If you want us to set up and run the subsidiary, see our [foreign company registration service](/services/foreign-subsidiary.html). The published fee band is USD 1,200 to USD 1,700, with government fees passed on at cost. The [country guides](/corridors) list the documents needed from each home country.

## Key terms

- **Wholly Owned Subsidiary (WOS)**: An Indian company whose entire share capital is held by a foreign parent, directly or through a nominee. Section 2(87) of the Companies Act, 2013 defines a subsidiary by control of the board or of more than half the voting power. A Private Limited company still needs two members, so one share sits with a nominee. (https://krystal7.com/glossary#wholly-owned-subsidiary)
- **Subsidiary company**: A company in which another company, its holding company, controls the board composition or more than one half of the total voting power. Section 2(87) of the Companies Act, 2013 sets the test, and control held through another subsidiary counts. (https://krystal7.com/glossary#subsidiary-company)
- **Nominee shareholder**: A nominee shareholder holds shares in an Indian company on behalf of a foreign parent, so that a private company meets the two member minimum in section 3 of the Companies Act, 2013. The nominee files Form MGT-4, the parent files MGT-5, and the company reports the beneficial interest to the Registrar in Form MGT-6 under section 89. (https://krystal7.com/glossary#nominee-shareholder)
- **Significant Beneficial Owner (SBO)**: An individual who, directly or through layers of entities, holds at least 10 percent of an Indian company's shares, voting rights or distributable dividend, or exercises significant influence or control. Section 90 of the Companies Act, 2013 and the Companies (Significant Beneficial Owners) Rules, 2018 require the SBO to declare in Form BEN-1 and the company to file Form BEN-2. (https://krystal7.com/glossary#significant-beneficial-owner)
- **Resident director**: Section 149(3) of the Companies Act, 2013 requires every company to have at least one director who stayed in India for 182 days or more in the financial year. A new company applies the test proportionately in its first financial year. Nationality does not matter. The role carries full statutory duties even when a parent abroad owns the company. (https://krystal7.com/glossary#resident-director)
- **Automatic route**: Under the automatic route, a person resident outside India can invest in an Indian company without prior government approval, subject to the sector caps and conditions in the Foreign Exchange Management (Non Debt Instruments) Rules, 2019. Investment by an entity or citizen of a country sharing a land border with India is excluded under Press Note 3 (2020 Series). (https://krystal7.com/glossary#automatic-route)
- **Government route**: The entry route on which foreign investment needs prior approval from the administrative ministry or department, sought through the National Single Window System, before shares are issued. It applies to sectors such as news media, multi brand retail and public sector banks, to stakes above automatic route caps, and to most investment from countries sharing a land border with India. (https://krystal7.com/glossary#government-route)
- **Press Note 3 (2020 Series)**: A policy notification of the Department for Promotion of Industry and Internal Trade that requires government approval for foreign investment where the investor, or its beneficial owner, is an entity of or a citizen of a country sharing a land border with India. Press Note 2 (2026 Series) relaxes it for non controlling ownership of up to 10 percent. (https://krystal7.com/glossary#press-note-3-2020-series)
- **Form FC-GPR**: The report an Indian company files with the Reserve Bank of India on the FIRMS portal after issuing equity instruments to a person resident outside India. Regulation 4(1) of FEMA 395/2019-RB requires it within 30 days of the issue. The shares must be issued within 60 days of receiving the money, or the money is refunded within 15 days after. (https://krystal7.com/glossary#form-fc-gpr)
- **Downstream investment**: Investment by an Indian company that is owned or controlled by persons resident outside India into another Indian entity. The Foreign Exchange Management (Non Debt Instruments) Rules, 2019 treat it as indirect foreign investment. The receiving entity must meet the sector's entry route, cap and conditions, and the investing company reports it in Form DI within 30 days. (https://krystal7.com/glossary#downstream-investment)

## Frequently Asked Questions

### What is a wholly owned subsidiary in simple words?
It is a company fully owned by one parent company. The parent and its nominees hold all the shares, and no outside investor holds any. The subsidiary is still a separate company with its own accounts and tax return.

### What is the full form of WOS?
WOS stands for wholly owned subsidiary. The term describes a company whose entire share capital is held by its holding company.

### What is an example of a wholly owned subsidiary in India?
The Reserve Bank of India fully owns DICGC, BRBNMPL, ReBIT, IFTAS and the Reserve Bank Innovation Hub. NPCI International Payments Limited is a wholly owned subsidiary of NPCI. NSE Clearing Limited is a wholly owned subsidiary of the National Stock Exchange.

### What is the difference between a subsidiary and a wholly owned subsidiary?
A subsidiary is controlled through the board or through more than half the voting power, under section 2(87). A wholly owned subsidiary is one where the parent holds all the shares. A subsidiary can have minority shareholders, and a wholly owned one cannot.

### Does the Companies Act, 2013 define a wholly owned subsidiary?
No. Section 2(87) defines a subsidiary company. The Act uses "wholly owned subsidiary" in sections 185, 186, 188 and 233 without defining it. In practice it means the holding company and its nominees hold the whole share capital.

### Is a wholly owned subsidiary a separate legal entity?
Yes. It is a company with its own legal identity, assets, contracts and liabilities. The parent's liability is limited to its share capital.

### Can a foreign company own 100 percent of an Indian company?
Yes, in most sectors under the automatic route. Some sectors have caps, a few are prohibited, and investors linked to land border countries need government approval. The company reports the investment in Form FC-GPR within 30 days of issuing shares.

### How many shareholders does a wholly owned subsidiary need?
Two. Section 3(1)(b) needs at least two members for a private company. The parent holds all the shares except one, and a nominee holds that one share for the parent.

### Does a wholly owned subsidiary need an Indian resident director?
It needs one director who stays in India for 182 days or more in the financial year, under section 149(3). That director can be of any nationality. A new company applies the test in proportion in its first year.

### What is the minimum capital for a wholly owned subsidiary in India?
There is no minimum paid up capital. We advise ₹15 lakh of authorised capital for most foreign subsidiaries, because the MCA registration fee is nil up to that amount.

### How is a wholly owned subsidiary taxed in India?
It is taxed as a domestic company at a base rate of 25 percent, or 22 percent under the concessional regime. The effective rate under the 22 percent regime is about 25.17 percent. A branch of a foreign company pays a base rate of 35 percent.

### Can a holding company give a loan to its wholly owned subsidiary?
An Indian holding company can, under section 185(3)(c), if the subsidiary uses the money for its principal business. A loan from a foreign parent is an external commercial borrowing. It needs a loan registration number before drawdown.

### What is a step down subsidiary?
It is a subsidiary of a subsidiary. When a foreign owned Indian company invests in another Indian company, FEMA treats it as downstream investment. The investing company files Form DI within 30 days of allotment.

### Can a wholly owned subsidiary merge with its parent?
Yes. Section 233 provides a fast track merger between a holding company and its wholly owned subsidiary. Since 17 Sep 2024, a foreign holding company can also merge into its wholly owned Indian subsidiary by that route.

### Does a wholly owned subsidiary need an audit?
Yes. Every Indian company needs a statutory audit, whatever its size or revenue. Only a Chartered Accountant in practice in India can sign the audit report.

### How long does it take to set up a wholly owned subsidiary in India?
On our filings, the parent's documents take about 4 to 5 business days to notarise and apostille. The bank account takes about 30 calendar days after incorporation. The capital and Form FC-GPR follow.

## Sources

- India Code, The Companies Act, 2013 (Act 18 of 2013), sections 2(6), 2(46), 2(85), 2(87), 3, 10A, 89, 90, 96, 139, 149, 185, 186, 187, 188 and 233, text checked 14 Nov 2026, https://indiacode.nic.in/handle/123456789/2114
- Ministry of Corporate Affairs, Companies (Restriction on Number of Layers) Rules, 2017, G.S.R. 1176(E) of 20 Sep 2017, text checked 14 Nov 2026, https://www.mca.gov.in/content/mca/global/en/acts-rules.html
- Reserve Bank of India, About Us, Subsidiaries, read 14 Nov 2026, https://rbi.org.in/Scripts/AboutUsDisplay.aspx
- National Payments Corporation of India, NPCI International Payments Limited, read 14 Nov 2026, https://www.npci.org.in/international/nipl
- National Stock Exchange of India, NSE Group Companies, read 14 Nov 2026, https://nseindia.com/national-stock-exchange/our-group
- Reserve Bank of India, Foreign Exchange Management (Mode of Payment and Reporting of Non Debt Instruments) Regulations, 2019, FEMA 395/2019-RB, https://www.rbi.org.in/scripts/FS_Notification.aspx?Id=11723&Mode=0&fn=5
- Press Information Bureau, Government of India, release on Press Note 2 (2026 Series), https://www.pib.gov.in/PressReleasePage.aspx?PRID=2301992
- Krystal7 SPICe+ challans, Haryana (14 Aug 2026) and Delhi (15 Oct 2026)

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