Wholly owned Subsidiary company Formation in India

Wholly owned subsidiary is a company in which another company holds 100% share. The company which holds 100% share is called parent company. An organization will become a subsidiary of another when that other organization holds 51 to 99.99% share in it. When that shareholding becomes 100% it will be called as a wholly owned subsidiary company or organization.

Example: if “A ltd” holds 100% share in “B ltd” then “B ltd” will become wholly owned subsidiary of “A ltd” and “A ltd” will be called a parent company of “B ltd”.

When a foreign entity having registered office outside India has invested money by acquiring 100% shares of an Indian company through our Indian FDI policy the Indian company becomes a wholly owned subsidiary of that foreign company. 

When an Indian company acquires 100% share in one of the foreign company then that foreign company becomes a wholly owned subsidiary of the Indian company.

You can form it as a private limited or a public limited.

Minimum requirements

  • Two directors
  • Two subscribers who can become director
  • Minimum authorised capital of Rs. 1, 00,000

Steps

Apply for DIN

All the directors wanted to form a wholly owned subsidiary in India need to file an application in form DIN-1 to get their director identification number (DIN). To know detail procedure of DIN application please read this article.

Apply for a digital signature certificate (DSC)

Digital signature is an electronic signature used to authenticate any digital message or documents. A properly implemented digital signature gives the receiver reason to believe that the message has been sent by the owner of the signature and the original owner can not deny for the authentication of the signature. Digital signature uses encryption technique and a public/private key to verify the authenticity of a person or transaction.

One of the directors needs to get digital signature certificate for signing all the e-forms to be filled with the registrar of companies. Know how to get DSC

Apply for your Company Name

You need to apply MCA for your desired name approval. The application has to be made in application form 1A. You should provide a name up to a maximum of 6 alternative names in preference of your priority to get the name approved.

If your application satisfied all the requirements of companies act and rules then the registrar office will approve your name within 3-7 days time. After getting the name approval you need to avail the same within 60days time.

Incorporate

With the name approval letter you can apply to incorporate your wholly owned subsidiary company. Following documents are required to be submitted along with the application form “Form 1”;

  • From 18 (notice of situation of registered office)
  • Form 32 (appointment of directors)
  • MOA and AOA

All the above documents need to be filled online with the requisite fee. After verification, ROC will approve the forms and issue a certificate of incorporation to your mail id (provided while applying for incorporation). If any changes required ROC will intimate the same to you and after your rectification ROC can issue you the certificate of incorporation.

After getting a certificate of incorporation you can start working with your wholly owned subsidiary company.

One thought on “Wholly owned Subsidiary company Formation in India

  1. Nilay

    We are in category of 100% FDI, and establishing a subsidiary in India for our European parent company. One of the founders from parent company is nominated a director for Subsidiary in India.

    Question:
    Is it mandatory to allocate at least 1 share to nominee director in India? Isn’t it possible to have 100% shares owned by our parent European company?

    Thanks in advance for answering.

    Nilay

    Reply

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