Connecting Businesses with Opportunities in India

Foreign Company Registration in India

Submitted by CA Shashi Mohan on Fri, 05/15/2020 - 6:16am.

 

Foreign Company Registration in India

  • Any business registered (corporate entity) outside India is considered as a ‘Foreign Company’
  • The foreign business must be allowed as per local laws to invest in another country and can appoint Authorised Signatory on its behalf
  • There is no requirement of Financial or Other Credentials of such foreign companies in order to be eligible to register a company in India
  • Only a Foreign Company or Corporate Entity can register a branch office (BO), liaison office (LO) or project office (PO)
  • A foreign company can also avail the same name subject to availability at Registrar of Companies database in India
  • A foreign company can be a Shareholder in the Indian company. Two or more companies of the same group or even independent companies can also form a company in India
  • The foreign company holds the share in Indian Company through its ‘Authorised Representative’
  • Such Authorised Representative need to be appointed by a Board Resolution of the foreign company and the person need not be a ‘Resident in India’
  • Such Authorised Representative also does not require to visit India during the entire incorporation process
  • Apparently the KYC Document (Notarized/Appostiled) of the Foreign Company and also its Authorised Representative will be required in India

Advantage of Foreign Company

  • Being a shareholder of an Indian company, the foreign company can control the Indian business directly by implementing its uniform corporate policies and other Standard Operating procedures.
  • Financial reporting, consolidation becomes easier at the Head Office
  • Repatriation of profits becomes more convenient and easy
  • Financing of Indian Company can be easy by providing Corporate Guarantees
  • A shareholder of Indian Company, which is a corporate entity/a foreign business can appoint any person to attend the Annual General Meeting in India
  • Business credentials at a higher degree

Most Suitable Structure

A foreign company can register a  branch office (BO), liaison office (LO) or project office (PO) based on their business requirements in India. A foreign company can also register a Limited Liability Partnership (LLP) and even a simple Partnership Firm with prior approval of the Reserve bank of India (RBI).

Registering a Private Limited Company (PLC) is however the most popular legal business structure in India.

Types of Entities in IndiaMinimum Requirement

Wholly Owned Subsidiary or 

100% Foreign Shareholding

  • 2 Foreign Companies, Foreign Nationals or a combination thereof holding 100% of shares
  • 1 or more Director resident in India
  • 1 or more Director foreign nationals or  foreign residents

Foreign Company

Majority of Shareholding

  • 2 Foreign Companies, Foreign Nationals or combination thereof holding 51% of shares
  • Other shareholders holding 49% shares
  • 1 or more Director resident in India
  • 1 or more Director foreign nationals or  foreign residents
Joint Venture (JV) Company
  • 1 or more Foreign Company holding % of Shares as per JV Agreement
  • 1 or more Indian Company holding % of Shares as per JV Agreement
  • 1 or more Director resident in India
  • 1 or more Director foreign nationals or  foreign residents

We summarise herewith the basic requirement, timelines, and other prerequisites of registering your business in India and also making it operational in the most effective way. 

Basic Requirements

Name of the CompanyNot to be identical to an existing one with ROC Database
Share CapitalNo minimum capital 
DirectorsMin. 2 and at least 1 of whom should be a resident of India
ShareholdersMin. 2 (Businesses or Individual, Foreigner or Resident)  
Registered OfficeJust an address

 

 Basic Documentation

Documents from foreign countries need to be in the English language. In case the documents are not in English, everything needs to be translated into English by a local authorized translator. Thereafter all the documents required to be legalized by Notarization or Apostilation at the appropriate authorities.

Corporate ShareholderRegistration & Address Proof
Directors/ShareholdersIdentity & Address Proof (Notarized & Apostilled)
Registered OfficeInitially the Address only (Lease Agreement within 30 days of incorporation) 
Other DocumentsMemorandum & Article of Association, Board Resolutions of Holding Company, Declaration by Directors, Declaration by Shareholders

 

Timelines

Initial DocumentationWeek 1 & 2, Arrangement & getting the same Notarized or Apostilled
Filing & ApprovalWeek 3
Other Domestic RegistrationsWeek 3
Set Up a Bank AccountWeek 3
Capital Infusion & related complianceImmediate after Setting of Bank Account. Compliances in 3-4 weeks simultaneously

 

Practical Aspects

Name of HO CompanyNon-Objection Certificate from the Parent Company required in the beginning
Physical Presence of Directors/Shareholders in IndiaNot Required
Timeline to bring agreed initial Share CapitalWithin 60 days of incorporation

 

Operational Readiness

Leasing Out Office SpaceThe identification of space can be done in advance. Signing of Lease Agreement immediately after incorporation
Hiring StaffIt can be done along with the incorporation process. Appointment Letters can be issued immediately after incorporation
1st Import/ExportImmediate after incorporations/domestic registrations
Sales ActivityImmediate after incorporations/domestic registrations
 
 

About the Author: Shashi Mohan/FCA has over 20 years of experience in Cross Border Business Strategies and Entry India Services. He has been responsible for Consulting, Legalization, and Operational Management of hundreds of overseas brands in India. He can be reached at shashi.m@excelorindia.com  or +91 9818 700 482   

 

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