Monday, March 18, 2013

setting up of 100% foreign subsidiaries

A foreign company can form a WOS in sectors where 100% foreign direct investment is permitted under the FDI policy. A WOS gives the most flexibility and protection to a foreign investor in India. A WOS can be defined as an entity whose entire share capital is held by foreign corporate bodies. A WOS can be formed either as a private or public company, limited by shares or guarantee, or an unlimited liability company. Considering the various exemptions available to a private company limited by shares (a “private company”) under India’s Companies Act, 1956 (the “Act”), it is recommended that a WOS be established as a private company.

Key Features of WOS :

  • In India companies are incorporated and regulated under the provisions of the companies Act, 1956 and are subjected to certain procedural formalities under the Act.
  • The personal liability of member is limited to the amount unpaid on their shares
  • It can undertake all types of business activities as may be permitted by its charter, which may include marketing, manufacturing, providing services, etc.
  • No RBI approval is needed where 100% direct investment is permissible.
  • It is treated as domestic company under Indian tax law and is eligible for all the tax deductions and benefits as provided to any other Indian company.
  • Individual director are required to obtain DIN (Director Unique Identification Number) from the Ministry of Company Affairs.
  • Funding can be in the form of share capital, loans and business operations. 

Services required:

  • Formation of WOS in accordance with the requirements of Ministry of Corporate Affairs
  • Assistance in procuring office spaces
  • Obtaining various registrations such as PAN, TAN, ESI / PF, Excise, Service Tax, VAT Registrations, etc.
  • Assistance in managing Bank Accounts
  • Consultancy on utilization of funds
  • Assistance in ECB from overseas bodies and approvals from Indian Authorities
  • Payroll Support
  • Data Entry Support
  • Maintenance of Books of Accounts
  • General Advise on various law matters
  • Ensuring proper compliance with various statutes
  • Preparation and finalization of Balance Sheet and Profit & loss Account
  • Tax Planning and management
  • Filing returns as required by various applicable statutes
  • Representation before Revenue Authority
  • Obtaining advance rulings

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