Top Mistakes to Avoid When Setting Up a Pvt. Ltd Company in India

Setting up a Private Limited Company offers numerous advantages, but overlooking key legal or procedural steps can delay your registration or lead to compliance issues later. If you're exploring the steps to setup a PVT LTD company, it’s just as important to know what not to do. Avoiding common mistakes can save time, money, and legal trouble down the line.

Choosing the Wrong Company Name

One of the most frequent issues is selecting a name that’s too similar to an existing company or trademark. The MCA may reject your application outright if the name isn’t unique or violates naming guidelines.

How to avoid it:

• Use the MCA name search tool before submitting

• Avoid generic terms or abbreviations

• Check for existing trademarks as well

Incomplete or Incorrect Documentation

Your registration can be rejected or delayed if the submitted documents are incomplete, outdated, or mismatched. Even small errors in the spelling of names or addresses can create complications.

What to double-check:

• PAN, Aadhaar, and address proof must be valid and match exactly

• NOC for registered office must be properly signed

• DSC and DIN must be correctly issued

Ignoring Post-Incorporation Compliance

Once your Pvt. Ltd company is registered, you must complete several post-incorporation steps. Many founders assume that registration ends the process, but neglecting these actions can lead to penalties.

Key compliance tasks include:

• Appointing a statutory auditor within 30 days

• Opening a company bank account

• Issuing share certificates to shareholders

• Filing commencement of business (Form INC-20A)

Not Having a Proper MOA & AOA

Your company’s Memorandum of Association (MOA) and Articles of Association (AOA) lay the foundation for its functioning. Drafting generic or unclear documents can result in future disputes or regulatory issues.

Tip: Always get MOA and AOA prepared or reviewed by a legal expert to match your business objectives and structure.

Relying on Unverified Advisors or Agents

Many first-time entrepreneurs seek help from unverified consultants who promise fast incorporation. This can lead to hidden costs, legal gaps, or even fraud.

Better approach:

• Choose registered professionals (CA/CS/lawyer)

• Ask for transparent pricing and timelines

• Check reviews or client testimonials

Conclusion

Avoiding these common mistakes when taking the steps to setup a PVT LTD company can streamline your registration process and protect your business in the long run. A well-informed approach ensures that you start off legally strong and are fully prepared for future compliance.

Frequently Asked Questions (FAQs)

Q1: What happens if my chosen company name is rejected?
You will need to resubmit a new name proposal via the RUN service on the MCA portal. This can delay your registration by several days.

Q2: Is it mandatory to open a business bank account immediately after incorporation?
Yes, you must open a bank account in the company’s name to complete the commencement of business filing within 180 days.

Q3: What are the consequences of not filing Form INC-20A?
Your company will not be legally allowed to start operations or raise capital until this form is submitted.

Q4: Can I change the MOA or AOA later?
Yes, but it requires shareholder approval and filing forms with the ROC, making it a formal and time-consuming process.

Q5: Should I hire a CA for the entire registration process?
While not legally mandatory, working with a professional ensures that the process is accurate, compliant, and completed without unnecessary delays.

Exploring the Benefits of a Wholly Owned Subsidiary in India: A Complete Guide

India has fast emerged as a top destination for global businesses, thanks to its expanding economy, cost-effective workforce, and favorable government policies. One of the most effective and long-term entry strategies for foreign companies is establishing a Wholly Owned Subsidiary in India.

In this blog, we’ll explain why this model is a preferred route for international companies, how it works, and what steps are involved in setting one up.

What Is a Wholly Owned Subsidiary?

A wholly owned subsidiary is a private limited company formed in India that is entirely owned (100%) by a foreign parent company. This structure allows the foreign company to operate in India with complete control, while the subsidiary functions as an independent legal entity under Indian corporate law.

Why Companies Prefer Wholly Owned Subsidiaries in India

1. Full Control, Zero Local Dependency

You don’t need a local joint venture partner or investor. All decisions, strategies, and operations are managed by the foreign parent company.

2. Permanent Business Presence

Unlike liaison or project offices that have operational restrictions, wholly owned subsidiaries can engage in full-scale commercial activities—from manufacturing and sales to customer service and R&D.

3. Profit Repatriation

Indian laws allow subsidiaries to remit dividends, royalties, and profits back to the parent company—subject to tax compliance—making it a sustainable investment model.

4. Operational Independence

Since it’s an Indian legal entity, it can open bank accounts, sign contracts, hire employees, and own assets in India.

Who Should Consider Setting Up a Subsidiary?

• Multinational corporations expanding to India for long-term operations

• IT & software companies seeking to tap into India's tech talent

• Manufacturing firms wanting to set up plants under Make in India

• Startups and SMEs looking to scale operations cost-effectively

If you plan to stay for the long run, this model gives you the flexibility and legal coverage you need.

The Registration Process Made Simple

Wondering how to register a wholly owned subsidiary in India? Here’s a simplified process:

Step 1: Finalize Your Directors and Company Name

Choose at least two directors (one must be an Indian resident) and reserve a unique name for your company via the MCA portal.

Step 2: Apply for DSC and DIN

Directors must obtain a Digital Signature Certificate (DSC) and Director Identification Number (DIN).

Step 3: Prepare and File Incorporation Documents

This includes drafting the Memorandum of Association (MoA), Articles of Association (AoA), and submitting the incorporation form (SPICe+) along with KYC and other supporting documents.

Step 4: Company Incorporation and PAN/TAN

Once approved by the Registrar of Companies, your business is officially registered. You also receive a company PAN and TAN.

Post-Incorporation Compliance You Must Follow

• GST Registration
  Required if your turnover exceeds the threshold or you engage in inter-state business.

• FEMA & RBI Reporting
  Foreign Direct Investment (FDI) must be reported to the RBI through Form FC-GPR.

• Annual Filings
  You must file income tax returns, financial statements, and other forms annually.

• Payroll & Labor Law Compliance
  Ensure your employee records, salary structure, and benefits (PF, ESI) comply with Indian laws.

Why India Is an Ideal Location for Your Subsidiary

India offers a growing middle class, increasing demand for global brands, and a wide talent pool. Government initiatives such as Digital India, Startup India, and PLI schemes also provide an enabling environment for international businesses.

How Brooks Payroll Services LLP Helps You Get There Faster

Our team at Brooks Payroll Services LLP specializes in helping foreign companies establish their Wholly Owned Subsidiary in India with ease. We assist with:

• End-to-end incorporation

• Foreign investment compliance

• Statutory registrations (GST, PF, ESIC)

• Ongoing payroll and tax support

• Secretarial compliance and legal advisory

From paperwork to post-incorporation compliance, we simplify every step so you can focus on growing your business.

Conclusion

If you're looking for a secure and scalable way to expand into India, a wholly owned subsidiary is a proven route. It offers total control, tax advantages, and unlimited growth potential—all while ensuring you're fully compliant with Indian laws.

With the right local partner like Brooks Payroll Services LLP, entering the Indian market becomes seamless, efficient, and legally sound.

FAQs: Wholly Owned Subsidiary in India

1. Is 100% foreign ownership allowed in Indian subsidiaries?
Yes, in most sectors under the automatic route. Certain industries may require government approval.

2. Can I set up a subsidiary without visiting India?
Yes, the entire process can be completed remotely with proper documentation and authorization.

3. What documents are needed for incorporation?
You'll need passport copies of foreign directors, proof of address, MoA, AoA, and authorization letters.

4. Is the subsidiary taxed like an Indian company?
Yes. It is subject to Indian corporate tax laws, including GST, TDS, and income tax.

5. How long does the registration process take?
It typically takes 15–20 working days if all documents are in order.

Wholly Owned Subsidiary in India – Your Gateway to Business Success

Foreign companies aiming to establish a strong presence in India often choose the wholly owned subsidiary in India model. It allows complete foreign ownership while offering a legally recognized structure under Indian laws. Whether you're in IT, manufacturing, or consultancy, setting up a subsidiary can unlock the full potential of India’s rapidly expanding economy.

This post guides you through the essentials of forming a wholly owned subsidiary and why it’s a smart investment decision.

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What is a Wholly Owned Subsidiary?

A wholly owned subsidiary is an Indian company whose entire share capital is held by a foreign entity. It is incorporated under the Indian Companies Act, 2013, and functions as an independent private limited or public limited company. This structure provides the parent company full control over the subsidiary’s operations while complying with Indian legal requirements.

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Why Choose a Wholly Owned Subsidiary in India?

Foreign investors prefer this model for the following advantages:

• Complete Control – No local partnership is required; you own 100% of the company.

• Legal Separation – Limited liability and separate legal status protect the parent company.

• Local Recognition – An Indian subsidiary helps establish a credible brand presence.

• Flexibility – You can operate in any permitted sector and hire local talent.

• Profit Repatriation – Send profits back to the parent company following tax compliance.

• Tax Relief – Eligible for tax incentives, depreciation benefits, and DTAA provisions.

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Steps to Set Up a Wholly Owned Subsidiary in India

Follow this simplified procedure for company incorporation:

1. Apply for Digital Signature Certificate (DSC)

Required for authorized signatories.

2. Reserve the Company Name

Use the MCA’s RUN portal to submit your preferred company name.

3. Draft and File Incorporation Documents

Includes MOA, AOA, identity/address proofs, and board resolution from the foreign parent.

4. Submit SPICe+ Form

The integrated company registration form under the Ministry of Corporate Affairs.

5. Get PAN, TAN, and CIN

These are issued after approval of the incorporation application.

6. Open an Indian Bank Account

Transfer the paid-up capital from the foreign parent company to this account.

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Compliance Obligations After Registration

Your wholly owned subsidiary must comply with ongoing regulatory filings:

• Annual filings with Registrar of Companies (RoC)

• Income Tax Returns

• Goods & Services Tax (GST) filings

• Audit by a Chartered Accountant

• FEMA compliance for FDI-related transactions

• Maintenance of statutory registers

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Sectors with 100% Automatic FDI Route

India allows full foreign ownership in many sectors without prior approval, such as:

• Software and IT

• Renewable Energy

• Food Processing

• B2B E-commerce

• Education and Training

• Industrial Manufacturing

Note: Some sectors like defense, telecom, and print media require government approval.

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Benefits of Investing in India

• 🌍 Strategic Market Access to Asia and Middle East

• 👨‍💼 Cost-Effective and Skilled Workforce

• 🏗️ Robust Infrastructure Development

• 📈 Government Support and Incentives

India’s startup ecosystem, digital infrastructure, and foreign investment reforms make it a lucrative destination for international businesses.

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Frequently Asked Questions (FAQs)

Q. Can a foreign company own 100% of shares in an Indian entity?
Yes, in most sectors under the automatic route.

Q. Is a local partner mandatory for setting up a company in India?
No, a wholly owned subsidiary can be completely foreign-owned.

Q. How long does it take to incorporate a subsidiary?
It generally takes around 10 to 15 business days.

Q. Can profits be sent back to the foreign parent company?
Yes, after complying with tax and FEMA regulations.

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Conclusion

Forming a wholly owned subsidiary in India is an ideal way for global companies to establish a secure and independent business in one of the world's most promising markets. With transparent legal procedures, favorable FDI policies, and a growing consumer base, India offers everything a foreign business needs to thrive.

If you're planning to expand in India, consult with experienced professionals for a seamless setup and long-term compliance.