Wholly Owned Subsidiary: Meaning, Examples & Incorporation Process

What if I tell you that by expanding your business globally, you don’t have to give up control? For companies with expansion plans, a wholly owned subsidiary comes as the best solution. This structure reflects confidence, demonstrates intent, and shows readiness to establish a lasting presence in a new market.

The India Brand Equity Foundation reported that investors poured around ₹4.44 lakh crore in Foreign Direct Investment (FDI) in the country between April and September 2025. Much of this investment flows through wholly owned subsidiaries, enabling parent companies to tap into the country’s growing market. These figures also show that global businesses are moving beyond tentative steps, investing decisively, and planning for long-term growth.

This blog covers the advantages, legal framework, and step-by-step process for setting up a wholly owned subsidiary, helping you expand confidently into India’s market.

What is a Wholly Owned Subsidiary?

A wholly owned subsidiary is a company fully owned by another firm, called the parent or holding company. It gives the parent 100% ownership and complete authority over decisions, operations, profits, and long-term strategy.

Although the parent company fully owns the subsidiary, the latter operates as a separate legal entity. This means it can enter into contracts, own assets, and be held accountable in its own name. The parent company enjoys full control, but its liability is generally limited to the investment it makes in the subsidiary.

Businesses particularly favor this structure when they want to:

• Maintain full control over operations and decision-making without needing approval from other shareholders.
• Establish a long-term market presence to build a strong, independent footprint in foreign markets.
• Make independent operational, marketing, and financial decisions without relying on partners.
• Consolidate profits and losses efficiently under the parent company.
• Operate as a separate legal entity, capable of entering into contracts and owning assets while limiting the parent’s liability.
• Expand into new markets while protecting intellectual property and brand identity.

In essence, these benefits of a wholly owned subsidiary allow a parent company to maintain strategic control and plan for sustainable growth. 

Famous Examples of Wholly Owned Subsidiaries in India

India is a key destination for companies expanding or consolidating operations. Many choose wholly owned subsidiaries to retain full control over strategy, operations, and brand identity. Here are some notable wholly owned subsidiary examples: 

Subsidiary Name	Parent Company	Overview / Key Role	Why Wholly Owned
Amazon Seller Services Pvt. Ltd.	Amazon.com, Inc.	Oversees e-commerce and cloud operations in India	Ensures operational efficiency, smooth customer experience, and supply chain control
Microsoft India Pvt. Ltd.	Microsoft Corporation	Manages enterprise solutions, sales, and research in India	Safeguards intellectual property and executes global strategies effectively
Apple India Pvt. Ltd.	Apple Inc.	Handles sales, marketing, and support services for Apple products in India	Maintains brand consistency and protects proprietary technology
IBM India Pvt. Ltd.	IBM Corporation	Provides IT services, consulting, and software solutions in India	Enables complete strategic and operational control over Indian operations
Infosys Consulting Services Pvt. Ltd.	Infosys Ltd.	Offers consulting and IT services under a separate entity	Maintains brand, strategy, and operational control

Legal and Regulatory Framework for Wholly Owned Subsidiaries in India

The Companies Act, 2013, defines a wholly owned subsidiary as a separate legal entity. Setting up one requires compliance with key legal, regulatory, and operational rules. These include:

• FDI and FEMA Compliance: Foreign parent companies must follow FDI, FEMA, and RBI regulations, covering capital inflows, profit repatriation, and reporting. Most sectors allow 100% FDI under the automatic route. However, industries like defense, media, and telecom require prior government approval.
• Regulatory Position: The parent controls a subsidiary company by holding over 50% voting power. The subsidiary must have 2–15 directors in a private company, appointed to align operations with the parent’s strategy.
• Operational and Compliance Requirements: The subsidiary maintains separate financial accounts, complies with corporate tax and GST, and obtains sector-specific approvals if required.
• Mandatory Registrations: A subsidiary must complete several mandatory registrations to comply with Indian tax and regulatory requirements, including:
  • PAN & TAN: For tax compliance and TDS obligations.
  • GST: Required if turnover exceeds the threshold or for mandatory registration.
  • Shops & Establishment Act registration: Needed if operating from commercial premises.
  • Professional Tax: Applicable state-wise, as per local laws.
• Operational and Compliance Requirements: The subsidiary must maintain separate financial accounts and comply with Indian corporate tax, GST, and sector-specific approvals if required.
• Mandatory RBI Reporting: Foreign parent companies must comply with RBI reporting requirements, including:
  • Foreign Collaboration – General Permission Route (FC-GPR) Filing: Submit within 30 days of receiving foreign investment.
  • Advance Remittance Form (ARF): Submit when remitting capital to India.

By adhering to these rules, a parent company can set up and operate a wholly owned subsidiary in India confidently and plan for long-term growth.

How to Incorporate a Wholly Owned Subsidiary in India?

Companies follow several legal and regulatory steps to set up a wholly owned subsidiary. Following these steps ensures smooth incorporation, compliance with Indian laws, and readiness to operate.

1. Obtain DSC

• Every proposed director must obtain a Digital Signature Certificate (DSC) to sign electronic documents with the RoC.
• The DSC enables directors to file electronic documents securely and legally.

2. File SPICe+ (INC-32) Form

Submit the SPICe+ (INC-32) form to the RoC. This single form:

• Reserves the company name.
• Allots a Director Identification Number (DIN) for proposed directors.
• Submits incorporation documents, including MOA and AOA.

Ensure the proposed company name complies with the Companies Act naming guidelines and does not infringe trademarks.

3. Draft MOA & AOA

• Prepare the Memorandum of Association (MOA) defining the subsidiary’s objectives and scope of business.
• Draft the Articles of Association (AOA) outlining internal governance, rights, and responsibilities of shareholders and directors.

4. File Incorporation Forms with RoC

• Submit Form INC-32 (SPICe+) along with MOA, AOA, and required documents to the RoC.
• Attach supporting documents such as proof of registered office, identity, and address of directors, and parent company details.

Note: Obtain a No Objection Certificate (NOC) from the office owner if the property is rented.

5. Obtain CoI

• Once the RoC verifies the documents, it issues the Certificate of Incorporation (CoI) to the company.
• The CoI confirms that the new wholly owned subsidiary operates legally as a recognized entity.

6. Apply for PAN and TAN

• Apply for a business PAN for tax purposes.
• Register for TAN to deduct and report tax obligations.

7. Open a Bank Account

• Open a bank account in the subsidiary’s name to manage capital contributions, operational expenses, and revenue.
• Ensure proper compliance with FEMA if foreign capital is being remitted.

8. Compliance Post-Incorporation

• File annual returns and financial statements with the (RoC).
• Register for GST once the business crosses the prescribed turnover threshold limit or engages in mandatory GST-applicable activities.
• Comply with RBI and FEMA regulations if the parent company is foreign. This includes reporting foreign investment, FC-GPR filing within 30 days, ARF submission, and repatriation of profits.
• Comply with other local taxes such as Professional Tax and TDS, where applicable.

The procedure for the incorporation of a wholly owned subsidiary company in India requires careful planning, regulatory compliance, and strategic execution. At RegisterKaro, we offer deep expertise in corporate law and FDI regulations to help companies manage this process seamlessly.

Contact RegisterKaro today and set up your wholly owned subsidiary in India with confidence, speed, and compliance. Our team handles all legal, regulatory, and documentation requirements so you can focus on growing your business.

Wholly Owned Subsidiary vs Other Entry Routes

Choosing the right entry route is critical when expanding into a new market. Each option provides a different balance of control, risk, and investment. 

The table below compares the key entry routes, highlighting their ownership structure, risk, compliance requirements, and ideal use cases.

Entry Route	Ownership & Control	Risk Exposure	Compliance & Setup	Best Suited For
Wholly Owned Subsidiary	100% ownership with full operational and strategic control	Limited to the capital invested	Higher compliance and setup requirements	Companies seeking full control and long-term growth
Partly Owned Subsidiary	Majority ownership with shared control	Shared with minority shareholders	Moderate to high compliance	Businesses seeking control with local participation
Joint Venture	Shared ownership and decision-making	Shared risk with local partner	Moderate compliance	Businesses needing local expertise or shared investment
Branch Office	No separate legal entity; parent controls operations	The parent bears full liability	Restricted activities; regulatory approvals needed	Companies testing the market without full incorporation
Liaison Office	No commercial operations allowed	Minimal risk	Low compliance; RBI approval required	Market research and relationship building
Franchise Model	Limited operational control	Low financial risk	Low setup complexity	Rapid expansion with local partners

This table highlights key differences, including the difference between a wholly owned subsidiary and a partly owned subsidiary. It helps you choose the entry route that best aligns with your business priorities and long-term goals.

Advantages & Disadvantages of Wholly Owned Subsidiary

A wholly owned subsidiary offers a powerful way to expand with full control, but it is not without trade-offs. Evaluating both the advantages and disadvantages of wholly owned subsidiaries helps companies decide whether this structure aligns with their goals.

Pros	Cons
Provides complete control over operations, strategy, and decision-making	Requires higher initial investment as the parent company bears all setup and operating costs
Protects intellectual property, technology, and brand identity	Exposes the parent company to full financial and operational risk
Operates as a separate legal entity, limiting parent liability	Involves complex legal, tax, and regulatory compliance
Allows independent taxation under Indian corporate tax laws	Subject to corporate tax, GST, and transfer pricing regulations in India
Enables clear profit reporting and structured tax planning	Requires regular tax filings, audits, and statutory reporting
Improves eligibility for bank loans and credit facilities in India	Inter-company loans must comply with FEMA and RBI guidelines
Facilitates easier access to funding compared to branch offices	Funding delays may occur due to regulatory approvals
Supports long-term growth and signals strong market commitment	Requires continuous management oversight and compliance effort
Enables efficient consolidation of profits and losses at the parent level	Lacks local partner support, which may slow market adaptation

When used strategically, a wholly owned subsidiary delivers control, stability, and growth potential. However, companies must balance these benefits against higher investment and risk exposure before committing to this structure.

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