Set Up a Wholly Owned Subsidiary in India from Canada

How to Register a Wholly Owned Subsidiary in India from Canada

A Wholly Owned Subsidiary (WOS) is the strongest market-entry structure for Canadian companies seeking complete control over their Indian operations. In a WOS, the Canadian parent company holds 100% of the equity shares in the Indian entity, which operates as a separate legal entity under the Companies Act, 2013, with its own PAN, GST registration, bank accounts, and compliance obligations.

India's liberalised FDI regime permits 100% foreign ownership in most sectors under the automatic route, making the WOS structure accessible to Canadian businesses across IT services, manufacturing, professional services, clean technology, mining, agriculture, and financial technology. The India-Australia-Canada trilateral investment corridor continues to grow, with Canadian direct investment in India spanning diverse sectors.

A significant procedural improvement came in January 2024 when Canada joined the Hague Apostille Convention, eliminating the need for embassy attestation and substantially reducing document authentication timelines. For entity structure comparisons, see Branch Office vs Subsidiary and WOS vs LLP for Foreign Investors.

FDI Route and Regulatory Requirements

Canadian companies establish a WOS in India through the Automatic Route, requiring no prior approval from the RBI or the central government. The parent company incorporates the subsidiary and files post-incorporation RBI forms to report the foreign investment.

Key regulatory considerations for a Canadian WOS:

• 100% FDI under automatic route: Permitted in IT/ITES, manufacturing, food processing, infrastructure, e-commerce (marketplace model), healthcare, renewable energy, and most service sectors
• Sectors with FDI caps: Insurance (100% with conditions per 2025 Union Budget), multi-brand retail (51% with government approval), defence (74% automatic, 100% with government approval), banking (74%), print media (26%)
• Press Note 3 exemption: Canada is not a country sharing a land border with India. The additional security screening under Press Note 3 (2020) does not apply to Canadian investors
• Board resolution requirement: The Canadian parent's board of directors must pass a formal resolution authorising the establishment of the Indian WOS, specifying the authorised capital, proposed directors, and business objectives

The WOS is registered as a Private Limited Company with the Registrar of Companies (ROC) and must comply with both the Companies Act, 2013 and FEMA regulations. For regulatory details, see our FDI Advisory service and the Automatic Route vs Government Approval comparison.

DTAA Benefits for Canadian Investors

The India-Canada Double Taxation Avoidance Agreement, signed on 6 May 1997, provides substantial tax efficiencies for WOS structures. When the Indian subsidiary repatriates profits, royalties, or interest to the Canadian parent, the DTAA limits withholding taxes at source:

• Dividends: Capped at 15% for companies controlling 10% or more of the voting power in the paying company (Article 10). For other shareholders, the cap is 25%
• Interest on intercompany loans: Maximum 15% in the source country (Article 11)
• Royalties for industrial/scientific equipment: Reduced rate of 10% (Article 12)
• Technical service fees: Capped at 15% (Article 12)
• Capital gains: Specific provisions apply based on asset type, with real property gains taxable in the country where the property is situated

For a WOS, the DTAA is particularly valuable because all cross-border payments between the Indian subsidiary and Canadian parent flow through treaty-governed channels. Structuring management fees, IP licenses, and intercompany pricing within DTAA parameters optimises the global effective tax rate. See our India-Canada Capital Gains Tax guide and DTAA Master Guide for detailed analysis.

Document Requirements and Authentication

Canada's accession to the Hague Apostille Convention on 11 January 2024 transformed the document authentication process for Indian company registration. Previously, Canadian documents required legalisation through the Consulate General of India in Toronto or Ottawa, a process that added 3-4 weeks and significant cost. Now, apostilles issued by Global Affairs Canada or designated provincial authorities are directly accepted by Indian regulatory bodies.

Compare the old and new processes in our Apostille vs Embassy Attestation guide.

Documents from the Canadian Parent Company

• Board resolution authorising incorporation of the Indian WOS, appointment of directors, and specification of authorised capital (apostilled)
• Certificate of Incorporation / Articles of Incorporation of the Canadian parent (apostilled)
• By-laws or equivalent governance documents of the parent company (apostilled)
• Latest audited financial statements of the Canadian parent (apostilled)
• Passport copies of all proposed directors (notarised and apostilled)
• Proof of address for all proposed directors (notarised and apostilled, not older than 2 months)
• Power of Attorney for the authorised representative in India (apostilled)
• Ultimate Beneficial Ownership (UBO) declaration

Documents Prepared in India

• Digital Signature Certificates (DSC) for all proposed directors
• Director Identification Numbers (DIN)
• Memorandum of Association (MoA) of the Indian WOS
• Articles of Association (AoA) of the Indian WOS
• Registered office proof (lease agreement + landlord NOC + utility bill)

Step-by-Step Registration Process

Establishing a WOS follows the standard Private Limited Company incorporation via the SPICe+ portal, with additional FDI reporting obligations:

Step 1: Canadian Parent Passes Board Resolution

The parent company's board of directors passes a resolution to incorporate the Indian WOS. The resolution specifies the authorised share capital, names of proposed directors, registered office location, and business objects. This resolution is apostilled through Global Affairs Canada.

Step 2: Obtain DSCs and DINs

Apply for Digital Signature Certificates for all proposed directors. DINs are obtained through the SPICe+ form. At least one director must be an Indian resident (having stayed in India for 120 or more days in the preceding financial year).

Step 3: Name Reservation and SPICe+ Filing

Reserve the company name via the RUN service or SPICe+ Part A. File SPICe+ Part B with the electronic MoA (INC-33), AoA (INC-34), and all supporting documents. The ROC issues the Certificate of Incorporation along with PAN and TAN.

Step 4: Open Bank Account and Receive Capital

Open a current account with an Authorised Dealer (AD) bank in India. The Canadian parent remits the share subscription amount via wire transfer. The bank issues the Foreign Inward Remittance Certificate (FIRC), which is a mandatory document for RBI reporting.

Step 5: Allot Shares and File FC-GPR

The WOS board allots shares to the Canadian parent. Within 30 days of allotment, file Form FC-GPR on the RBI's FIRMS/SMF portal. Required attachments include the FIRC, KYC documents of the foreign investor, a valuation certificate from a SEBI-registered merchant banker or practising CA, and a company secretary's compliance certificate.

Step 6: Post-Incorporation Registrations

Complete GST registration, Shops and Establishment registration, Professional Tax registration (state-specific), and any sector-specific licences or permits required for the WOS's business activities.

Timeline and Costs

The end-to-end timeline for establishing a WOS in India from Canada is approximately 6-10 weeks:

Cost Breakdown

• Government fees (ROC/MCA): INR 5,000-15,000 (based on authorised capital; WOS entities typically have higher authorised capital)
• Stamp duty: INR 5,000-20,000 (varies by state of registration)
• DSC: INR 1,500-2,500 per director
• Professional fees (CS/CA/legal): INR 25,000-75,000
• Valuation report for FC-GPR: INR 15,000-30,000
• Apostille charges in Canada: CAD 30-60 per document
• Total estimated cost: INR 75,000-1,50,000 plus apostille costs

For entity comparisons, see Canadian Corporation vs Indian Pvt Ltd.

Post-Registration Compliance

A WOS in India carries full corporate compliance obligations as a separate legal entity:

• Annual ROC filings: AOC-4 (financial statements) and MGT-7 (annual return)
• Income tax: Corporate tax at 22% (effective ~25.17%) or 15% for new manufacturing companies (effective ~17.16%)
• GST returns: Monthly GSTR-1 and GSTR-3B if GST-registered
• RBI/FEMA compliance: Annual Performance Report (APR), FC-GPR for each equity issuance, and FEMA reporting through FIRMS/SMF
• Transfer pricing: Mandatory for all related-party international transactions exceeding INR 1 crore
• Board meetings: Minimum four per year, at least one per quarter
• Statutory audit: Annual audit by a practising Chartered Accountant
• Annual General Meeting: Within 6 months of financial year-end

Beacon Filing provides comprehensive annual compliance, FEMA/RBI compliance, and corporate tax filing services for WOS entities.

Common Challenges for Canadian Companies

Navigating the New Apostille System

Canada's recent accession to the Hague Convention (January 2024) means the apostille infrastructure is still maturing. Global Affairs Canada handles federal documents, while provincial authorities may handle certain provincial documents. Some Canadian law firms and notaries are still building familiarity with apostille requirements for Indian company registration. Engage a professional familiar with both Canadian apostille procedures and Indian MCA requirements.

Time Zone Coordination

The time difference between Canada and India ranges from 9.5 hours (Newfoundland) to 13.5 hours (Pacific). This makes real-time coordination challenging. Most Canadian companies appoint an India-based authorised representative through a Power of Attorney to handle time-critical filings on the MCA portal, bank interactions, and regulatory submissions.

Valuation Report for FC-GPR

Every FC-GPR filing requires a valuation certificate from a SEBI-registered merchant banker or practising Chartered Accountant. For initial incorporation at face value, this is straightforward. For subsequent equity infusions, a full DCF (Discounted Cash Flow) or NAV (Net Asset Value) valuation is required. Start the valuation process early to avoid missing the 30-day FC-GPR filing deadline.

Transfer Pricing Scrutiny

The Indian tax authorities closely examine intercompany transactions between the WOS and its Canadian parent. Common transactions under scrutiny include management service fees, IP royalties, intercompany loans, and cost-sharing arrangements. All transactions must be at arm's length with contemporaneous documentation maintained from incorporation.

Resident Director Appointment

Identifying a reliable Indian resident director is critical. This person has legal fiduciary duties under the Companies Act, 2013. Canadian companies typically appoint their India country head, a senior local employee, or a professional nominee. The resident director must have been present in India for 120 or more days in the preceding financial year.

Currency Remittance and Exchange Controls

Share subscription amounts must be remitted in foreign currency (CAD or USD) through proper banking channels. The AD bank in India converts the remittance to INR and issues the FIRC. Ensure the remittance purpose code (P0006 for equity investment) is correctly specified. Errors in purpose codes can cause delays in FC-GPR processing.

For comprehensive guidance, explore our Foreign Subsidiary Registration service and the Canada country guide.

Frequently Asked Questions

Can a Canadian corporation hold 100% shares in the Indian WOS?

Yes, in all sectors where 100% FDI is permitted under the automatic route. The Canadian parent corporation (or its nominees) holds all shares. There is no requirement for an Indian shareholder, though at least one director must be an Indian resident.

What is the difference between a WOS and a regular subsidiary?

A WOS is a subsidiary where the foreign parent holds 100% of the shares. A regular subsidiary may have multiple shareholders, including Indian partners. Both are incorporated as Private Limited Companies. The WOS gives the Canadian parent complete control over management, strategy, and profit distribution without needing to consult other shareholders.

What is the FC-GPR filing deadline and penalty for late filing?

Form FC-GPR must be filed within 30 days of allotting shares to the foreign investor. Late filing attracts a Late Submission Fee (LSF) calculated as INR 7,500 plus 0.025% of the transaction amount per day of delay. The LSF is capped at the total transaction amount. Persistent non-compliance can result in compounding proceedings under FEMA.

How does the apostille process work in Canada now?

Since January 2024, Global Affairs Canada issues apostilles for federal documents (such as federal corporation certificates). Provincial apostille authorities handle documents originating from provincial jurisdictions. The apostilled document is directly accepted by Indian authorities (MCA, ROC, banks, RBI) without further consular verification. Processing typically takes 5-10 business days.

Can the WOS repatriate all profits to Canada?

Yes. After paying Indian corporate tax and dividend withholding tax (capped at 15% under the India-Canada DTAA for companies holding 10% or more voting power), the WOS can repatriate 100% of its distributable profits to the Canadian parent via dividends through an Authorised Dealer bank. No RBI approval is required for dividend remittances.

What is the effective tax rate for a Canadian WOS in India?

The Indian corporate tax rate for WOS entities is 22% (effective ~25.17% including surcharge and cess). New manufacturing companies can opt for 15% (effective ~17.16%). Upon dividend distribution, an additional 15% withholding applies under the DTAA. The Canadian parent can claim foreign tax credits for both corporate tax and withholding tax paid in India.