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  Ankit Jain
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Setting up a Wholly Owned Subsidiary (WOS)

A foreign company can also set up its operations in India by forming a wholly owned subsidiary in India in sectors where 100% FDI is permitted under the automatic route or where approval from the FIPB has been obtained for such investment.

What is a WOS?
 
A Wholly Owned Subsidiary or WOS is a company whose stock is entirely owned by another company. The owner of a wholly-owned subsidiary is known as the parent company or holding company. Because the parent company owns all of the stock of the wholly-owned subsidiary, the parent company can control all of its activities. Thus, all of the activities of the wholly-owned subsidiary are part and parcel of the parent company for both operating and reporting purposes. 

Why, then, does a company establish a wholly-owned subsidiary?

A wholly-owned subsidiary is a separate entity for legal purposes. Thus the laws of the state or country in which the wholly-owned subsidiary is incorporated apply to the subsidiary, but not the parent company.

How can a WOS be formed?

A wholly owned subsidiary can be set up as a:

  1. New company by forming a Private Limited Company or a Public Limited Company.
  2. Acquisition of 100% shares of an existing company.
In case the subsidiary company is proposed to carry on any business in which FDI upto 100% is not permitted under the FDI Policy, prior approval of the FIPB is required to be obtained. Other than such approval, the procedure for setting up of a subsidiary is same as that of any other private or public limited company.
For More Detailed Company Registration Procedure

How we may help you?

We have a team of qualified and experienced professionals who can assist you in the following services with respect to setting up a joint venture business in India:

  • Obtaining permission from RBI/FIPB where required
  • Incorporating the wholly owned subsidiary company
  • Assisting in acquisition of shares of an existing company
  • Drafting legal documents such as share purchase agreements
  • Obtaining PAN/TAN
  • Advising and assisting on regulatory compliances, etc.

 

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