A Wholly Owned Subsidiary (WOS) is an Indian company in which a single foreign parent holds 100% of the shares. In practice, two shares are issued — 99.99% to the foreign parent, 0.01% to a nominee (often a director or co-founder) so the company has the statutory minimum two shareholders. Operationally, it's a 100% subsidiary.
Why WOS is the default for foreign tech companies
- 100% control — no Indian JV partner with veto rights or board seats.
- Automatic FDI route in most tech / SaaS / IT services sectors — no government approval needed.
- Taxed as an Indian company (22% base + surcharge + cess under the new corporate tax regime), not as a branch of a foreign company (40% non-resident rate).
- Full GST input credit, R&D weighted deductions, STP / SEZ benefits available.
- Can lease office, hire employees, open bank accounts, issue invoices — the full operational toolkit.
- ESOPs can be issued either by the WOS on its own shares or by the foreign parent on parent's shares (subject to LRS).
- Clean acquisition target — buyers prefer to acquire the WOS as a clean entity vs. messy branch / EOR structures.
When WOS is NOT the right answer
| Situation | Better structure |
|---|---|
| Project of defined duration (e.g. 18-month construction contract) | Project office (RBI-approved) |
| Sectors with FDI cap below 100% (defence at 74%, broadcasting at 49%, etc.) | JV with Indian partner |
| Pre-revenue, < 5 hires, < 12 months runway | EOR while figuring out commercial fit |
| Single representative role (sales rep, liaison) | Liaison office (RBI-approved, non-commercial) |
WOS structure decision in one consultant call
FastLegal's consultant maps your business activity to the FDI policy, confirms automatic-route eligibility, and recommends the cleanest structure — WOS, JV, branch, project office or LO. The call typically settles structure in 20 minutes; the filing happens over the next 2 weeks.
WOS vs other foreign-investor structures
| Structure | Indian tax rate | 100% foreign owned? | Commercial activity? | Notes |
|---|---|---|---|---|
| Wholly Owned Subsidiary | 22% (corp) | Yes | Yes, all activities | Default. Independent Indian company. |
| Joint Venture (JV) | 22% (corp) | No (51-99% foreign) | Yes | Required where FDI caps apply |
| Branch Office | 40% (non-res) | — | Yes (specified activities only) | Same legal entity as foreign parent. Higher tax. |
| Liaison Office | Not taxable | — | No (representation only) | Cannot earn income in India |
| Project Office | 40% on India project profits | — | Yes (specific project) | Permitted for execution of a specific contract |
Ownership mechanics — the two-shareholder rule
Indian Companies Act requires a Pvt Ltd to have at least 2 shareholders at all times. A 'wholly owned' subsidiary therefore typically has:
- 99.99% held by the foreign parent — directly, as the actual owner.
- 0.01% held by a nominee — typically a co-founder or director, who holds the share 'for and on behalf of' the foreign parent under a declaration of trust.
- Both shares disclosed to MCA and reflected in the share register.
Some structures use a second corporate entity (e.g. a Mauritius holdco) as the second shareholder. This adds complexity for limited benefit; most foreign tech companies just use a nominee individual.
Frequently asked questions
Do we need a local Indian partner?+
No — 100% foreign ownership is allowed for most tech sectors via automatic route. The Indian-resident director requirement is statutory but doesn't require a partnership; one of your senior hires can fill the role.
Can we change from a WOS to a branch later?+
Not directly — they're different legal structures. You would dissolve the WOS and incorporate a branch separately. Almost never makes sense to move in that direction since branches are taxed higher.
What about Limited Liability Partnership (LLP) instead of WOS?+
LLPs are allowed under automatic FDI route with conditions. They don't support ESOPs and are less acquisition-friendly. For tech / scaling businesses, Pvt Ltd WOS is usually the better answer. See our LLP vs Pvt Ltd post for the full comparison.
Can our WOS later list on the Indian stock exchange?+
Yes — a WOS can become a Public Ltd company by passing a special resolution. The foreign parent's stake then dilutes via IPO. Many India IPOs over the last decade have been WOS-to-Public conversions.
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