Indian Subsidiary Shareholder and Director Requirements: Who Can Hold What

Last updated 26 September 2026

What are the shareholder and director requirements for an Indian subsidiary?

A wholly owned subsidiary (WOS) is a Private Limited company, so the company law rules for a private company apply: at least 2 members, at most 200, at least 2 directors, and at least 1 director resident in India. On top of that, the foreign investment is reported to the RBI under FEMA (the Foreign Exchange Management Act, 1999).

Take Marta, a finance head at a Berlin software company, who plans to put ₹50 lakh into an Indian subsidiary. The company issues 5,00,000 shares of ₹10 each. The parent subscribes to 4,99,999 of them, and a colleague in India holds the last share as nominee. The two directors are Marta's colleague from Berlin and an Indian country manager who lives in Pune. This is an illustration, not a quote or a client story.

The table lists each requirement as of September 2026 and what it means for your set-up.

Why can't a foreign parent be the only shareholder of an Indian subsidiary?

A foreign parent cannot be the only shareholder because a Private Limited company must have at least 2 members. The standard fix is that the parent holds all shares but one, and a second holder takes a single token share.

Shunya's Indian subsidiary page describes this as the parent holding 99% or more of the shares directly, with a nominee shareholder holding the balance. The legal structure is still one company with one real owner.

You may wonder about a single-member structure. We did not find a verified route for a foreign company to use one, so treat a two-member Private Limited company as the norm. If you are comparing structures more broadly, read Private Limited vs LLP vs OPC.

Holding all shares but one does not change your route under the FDI policy. Most sectors allow up to 100% foreign ownership under the automatic route. Some need government approval, so confirm your sector before assuming the automatic route.

Who can be the nominee shareholder in a wholly owned subsidiary?

The nominee shareholder is usually an individual, such as a director or employee, or another entity in the parent's corporate group. The nominee holds one share as nominee for the parent.

Two practitioner sources agree on this practice. How the nominee's holding is documented, for example any declaration under the Companies Act, is a point we could not verify, so your CA confirms it for your case.

What happens when the nominee changes

Moving the share to a new nominee is a transfer. A transfer between a resident and a non-resident can trigger a FEMA report on Form FC-TRS, generally within 60 days according to a practitioner source. Ask your CA before you move it.

Pick a nominee you expect to stay for years. That avoids repeat paperwork later, and it keeps the shareholder register clean when the bank or an auditor reads it.

Do you need a resident director, and who qualifies?

Yes, at least one director of an Indian subsidiary must be resident in India, meaning present in India for 182 days or more in the financial year. The director must also be an individual with a DIN (Director Identification Number) and a DSC (Digital Signature Certificate).

The test is days in India, not the colour of the passport. Shunya's page describes the requirement as a resident Indian director who was in India for 182 days or more in the previous financial year. The rule for a company's very first financial year is applied proportionately, so your CA confirms how it works for your incorporation date.

1. Choose a person who will genuinely be in India for most of the year, not someone who travels for half of it.
2. Keep a record of travel dates, since the day count matters if the question is ever asked.
3. Name a replacement before the resident director resigns, so the board never goes without one.

The resident director can be your country manager, a local co-founder, or a senior hire. Your parent's own executives can be the other director or directors, as long as one board seat meets the residence test.

Can foreign nationals be directors of an Indian subsidiary?

Yes, foreign nationals can be directors of an Indian subsidiary, provided the board also has a resident director. Each director needs a DIN and a DSC before the SPICe+ filing (Simplified Proforma for Incorporating Company Electronically Plus) can be signed.

A DIN for a new director can be applied for inside the SPICe+ form itself. A DSC for a foreign national may need notarised or apostilled identity documents, but we could not verify the current requirement, so your CA confirms it per director.

Documents usually asked for a foreign director

• Passport copy, all pages, and an address proof less than 2 months old.
• A notarised specimen signature and the director's consent and declarations, notarised or apostilled if signed abroad.
• Apostille or consular attestation for documents issued outside India. Practitioner sources say holders of Indian passports generally do not need apostille.

These are typical practitioner checklists, not an MCA mandate. For the full list and the apostille steps, see our guide on Indian subsidiary documents and apostille and the wider guide for NRIs and foreign nationals.

Who can hold what in an Indian subsidiary: shareholder, director or resident director?

The parent company holds the shares, individuals sit on the board, and only a person who meets the 182-day test fills the resident-director seat. The table shows how each type of person fits.

Where the parent or its beneficial owner has a land-border link, extra rules apply. See the next section. For the reporting duties that follow every share issue, read our guide on FDI and FEMA reporting for an Indian subsidiary.

Do land-border country rules change who can own or run the subsidiary?

Yes, where the investor is incorporated in, or its beneficial owner is a citizen of, a land-border country, government approval is generally needed under Press Note 3 (2020). The land-border countries named are Afghanistan, Bangladesh, Bhutan, China, Myanmar, Nepal and Pakistan.

Press Note 2 (2026 Series), released in March 2026, relaxed this. As reported by law firms, an investor with non-controlling beneficial ownership of up to 10% can use the automatic route, subject to reporting. Control, such as a board seat or a veto right, still triggers approval even below 10%.

This is why the director appointments matter. If any beneficial owner in your ownership chain is linked to a land-border country, tell your CA before you decide the board. The rules are operationalised through FEMA amendments of May 2026, and we suggest you confirm the current position before you file.

How does Shunya help with shareholders, nominee and directors?

On Shunya's Indian subsidiary page, a CA verifies your documents, checks name availability, obtains the DSC and DIN for directors, and prepares the SPICe+ filing with FEMA-compliant MOA and AOA. The page says it also helps foreign directors obtain a DSC from outside India.

You share your parent company details, proposed shareholding and resident director on the callback form. A practising Chartered Accountant reviews every filing before it goes to the Registrar of Companies.

Shunya's professional fee is ₹1,999. It does not include the DSC issuer's charge, government fees, stamp duty or other third-party costs, and these are billed separately. Your CA walks you through them on your callback.

If you want to compare the whole route, see Indian subsidiary registration or the cost guide. You can also call or WhatsApp +91 80809 18797.

This article is for general information only. For your specific situation, consult a practicing CA.