Written by : DG Gupta
A financial professional, qualified Chartered Accountants and Company Secretary examinations and enriched with experience of all types of accounting, taxation and compliance of Manufacturing as well as Service Industries
India is among the fastest-growing economies on the planet and holds immense development potential. It has a great pool of talent and innumerable opportunities not only for Indian businesses but also for foreign ventures.
Foreign entities have come to realize the bright prospects of investing in India. Thus, many international ventures are setting up their business here. Various policies, projects and schemes of the Indian government such as the Make In India project, Vocal for Local program, and the very recent Atmanirbhar Bharat scheme encourages and promotes foreign companies to set up their subsidiaries and branches in India.
The foreign companies set up in India are regulated by the provisions of The Companies Act, 2013, along with the guidelines issued by the Reserve Bank of India.
The definition of a foreign company, as stated in Section 2 (42) of the Companies Act and denotes that it is a company or body which has been established outside India and attracts the following conditions:
A foreign company can go for setting up a business entity in the Indian market in the following ways –
a. Wholly owned subsidiary- When an Indian company becomes a wholly-owned subsidiary of a foreign company, the concerned foreign company is required to invest 100% of its Foreign Direct Investment in that new subsidiary. This is a necessary part of foreign company registration in India.
b. Joint venture-
It refers to a business formed with a collaboration between a foreign company and a local business partner, which the foreign company itself generally chooses. The basis of the joint venture agreement is enclosed and contained in a Memorandum of Understanding (MoU) and Letter of Intent. Such documents must contain specific provisions and detailed information about the following-
a. By setting up a Liaison Office-
In the case where a Liaison Office is set up, one needs to follow the following conditions as communicated by the Reserve Bank of India-
b. Project Office -
When a foreigner wishes to establish a company in India and have contracted with an Indian company to carry out a certain project in the country, then prior permission of RBI isn't necessary, as long as-
c. As Branch office of a foreign company-
Prior approval of RBI is required for a foreign company to open its branch in India and conduct business. However, it must adhere to the following qualifications-
Being clear about foreign companies and the nuances of their registration, let's move forward to the process of foreign company registration in India.
Depending upon the type of business and company, there are the following ways to mark entry in India:-
There is an availability of 100% Foreign Direct Investment (FDI) for such companies.
In this scenario, however, 100% Foreign Direct Investment (FDI) is not allowed.
These cases are more relevant when you intend to operate commercially in India. But what to do in other situations? Well, in that case, you wish not to work in India commercially, you can opt for creating a liaison/project/branch/representative office.
Another important point is to choose a unique company name for registration. The registration of a company in India gets covered under the Registrar of Companies. Such a company has to follow the rules formulated by the Ministry of Corporate Affairs. One can lucidly register the company's name with the help of the Reserve Unique Name (RUN) service available on the MCA website.
There are basically two types of ccompanies, private and public. The registration process and compliances for these variants differ. Hence, it would be ideal if you make an analytical decision about the same before beginning the registration process.
Assuming that you have all the documents in place, it may take you around two weeks to conclude the foreign company registration in India. It's recommendatory to engage a team of certified accountants, professional company secretaries and lawyers to achieve the project objectives within set timelines.
While Foreign Company registration in India might look like a tedious task but, you can transform it into a cakewalk with the help of Gotaxfile. Our firm undoubtedly offers the best services in this regard. It would expedite the entire registration process for you and help you complete the paperwork in the set timelines.
We at Gotaxfile make sure to keep our clients updated with the latest requirements and deadlines. With the backing of our experienced and skilled team, we have given valuable guidance to many entities in their foreign company registration requisites. Consult our team now!
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