Complete Guide to Setting Up a Wholly Owned Subsidiary (WOS) in India – Compliance, Process & FDI Regulations.

Set up your Wholly Owned Subsidiary (WOS) in India with expert guidance. Learn FDI rules, FEMA compliance, incorporation process, and post-incorporation requirements. End-to-end support by Intellex Strategic Consulting.

Introduction

India continues to be one of the most attractive destinations for foreign investment, driven by a large consumer market, regulatory reforms, and ease of doing business. One of the most preferred entry routes for global companies is establishing a Wholly Owned Subsidiary (WOS).

A WOS allows a foreign company to have 100% ownership and full operational control over its Indian business while complying with Indian regulatory frameworks such as the Foreign Exchange Management Act (FEMA), 1999 and the Companies Act, 2013.

This article provides a complete compliance roadmap for foreign investors looking to establish a WOS in India.

What is a Wholly Owned Subsidiary (WOS)?

A Wholly Owned Subsidiary is an Indian company where 100% of the shares are held by a foreign parent company. It is treated as a domestic company under Indian law but is subject to FDI and FEMA regulations.

Step-by-Step Process to Incorporate a WOS in India

1. Check FDI Eligibility

Before incorporation, it is crucial to evaluate:

Sector-specific FDI caps
Whether investment falls under:
- Automatic Route (no prior approval required)
- Government Approval Route
Investments from land-border countries require prior government approval

👉 This is a critical first step to avoid regulatory complications later.

2. Incorporation Process (Under MCA)

The incorporation is done through the Ministry of Corporate Affairs (MCA):

Minimum 2 Directors required
- At least 1 Resident Director (mandatory)
100% shareholding by foreign parent company
Filing through SPICe+ Forms
Automatic generation of:
- PAN
- TAN
- Certificate of Incorporation (COI)

3. Opening Bank Account

After incorporation:

Open a company bank account in India
Receive share subscription money through normal banking channels
Obtain:
- FIRC (Foreign Inward Remittance Certificate)
- KYC from Authorized Dealer (AD) Bank

4. Share Allotment

Shares must be allotted within 60 days of receiving funds
Delay may result in compliance issues under FEMA

5. FEMA Reporting (Critical Compliance)

This is one of the most important regulatory steps:

File Form FC-GPR within 30 days of share allotment
Filing is done through the FIRMS Portal
Required documents:
- Valuation Certificate
- Company Secretary (CS) Certificate
- FIRC
- KYC documents

⚠️ Non-compliance can lead to penalties and Late Submission Fees (LSF)

6. Post-Incorporation Registrations (As Applicable)

Depending on business operations:

GST Registration
Import Export Code (IEC)
Shops & Establishment Registration
EPFO / ESIC Registration

7. Annual Compliance Requirements

After setup, ongoing compliance includes:

FLA Return
- Mandatory if foreign investment exists as of 31st March
- Due date: 15th July
MCA Annual Filings
Board meetings and statutory records maintenance