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Registration Of Foreign Companies in India

  • It is very important for all Indian and foreign companies to understand the companies set up in India under the Companies Act 2013.
  • A foreign company which plans to set up business in India has two options: Joint ventures and wholly owned subsidiaries. The foreign equity in such companies can be up to 100% depending on the necessities of the investor. A foreign company can set up their operations in India by getting into a joint venture with an Indian company or a wholly owned subsidiary in sectors where 100% foreign direct investment is permitted under the FDI policy.
  • All foreign companies have to agree to certain rules formed under the Companies Act, 2013.
  • Our team of professionals help foreign investors throughout and guide and assist them to do the right thing.
  • A foreign investor can either incorporate a private limited company or a public limited company. Whether a company is public or private, only the registrar of companies (ROC) has jurisdiction. A foreign company has to approach the ROC and give it proposed business idea and location of starting business. Based on the documents the ROC gives the investor a ‘Certificate of Registration’ which contains the date and incorporation number of the company registered. This document is of immense importance and serves as a proof/evidence that shows that the company is valid and registered in India.

FAQs

What is a foreign company?

According to section 2(42) of the companies act, 2013, a foreign company means any company or body corporate incorporated outside India which:

  • Has a site of business in India whether by itself or through a representative, physically or through electronic mode; and
  • Regulates any business activity in India in any other manner.
What documents are required for a foreign director to incorporate the company (company registration) in India?

Following are the documents needed for a foreign director for company registration in India:

  • Identity proof- a duplicate of passport
  • Extra recognition evidence- driving licence/ national id card
  • Address verification- telephone bill/ electricity bill/ bank statement/ any utility bill; these bills should not be older than two months.
Is RBI involved in registering the business of foreign companies in India?

Yes, as normally remittance of foreign currency is involved, the RBI regulated them through foreign direct investment (FDI) policy, foreign exchange management act (FEMA), 1999 etc.

What are the ways that a foreign company can run business in India?

A foreign company that is desirous of entering and doing business in India can enter in any of the below-given ways: 

As an Indian company
An Indian limited company is incorporated in India, and foreigners hold the shares in below given ways:

  • Wholly owned subsidiary: For an Indian company to become a wholly owned subsidiary of a foreign company, a foreign company needs to finance 100% FDI in that Indian company through an automatic route for foreign company registration in India.
  • Joint venture: The foreign company needs to elect a local partner with whom it wants to enter into a joint venture. Then, a letter of intent is to be signed, stating the basis for the joint venture agreement. A thorough analysis of all the terms should be done, and they must be consistent with regional and international law.
  • Subsidiary company: In this foreign company hold shares of Indian company up to the limit of 49.99% of the company’s total shares.

As a foreign company
A foreign company gets register under the companies’ act, 2013 to start a business in any of the below-given ways:

  • Branch office: It is established by a foreign company in India. A foreign company must be a large business and provide proof of profitability.
  • Liaison office: It can be established for all liaison activities in India. All the expenses of the liaison office must be met through remittance from the parent company.
  • Project office: It is established to execute projects awarded to a foreign company by an Indian company. Approval of RBI may be required.
What are the advantages of starting a business (company registration) in India by a foreigner?

India today is contemplated to be one of the major forces in the global economic market. Though India is a developing economy, its economy has a significant effect on global trading. The majority of the world’s leading developed nations are keen to have or expand their ties with India. The advantages of beginning a business in India by a foreigner are as follows:

  • Large population
  • Comprehensive tax system
  • Business friendly laws
  • Low operational cost
  • Indian financial system
  • Vast trade network
  • Strong base of English-speaking population
  • Indian work ethics and working class
  • Government’s initiatives
  • Startup India movement
What compliances are to be followed by a foreign company after establishing a place of business in India?

After establishing their business activities in India, foreign companies need to adhere to definite corporate compliances stipulated under the companies act, 2013 and companies ( registration of foreign companies) rules, 2014. Some of the corporate compliances that are required to be followed by a foreign company after establishing a place of business in India are as follows:

  • Reporting establishment of business in India (e-form fc-1)
  • Return of alteration (e-form fc-2)
  • Annual accounts and list of places of businesses in India (e-form fc-3)
  • Audit of accounts
  • Annual return
What type of companies can be incorporated by a foreign investor?

A foreign investor can either build a private limited company or a public limited company. Whether a company is public or private, only the registrar of companies (ROC) has the authority. A foreign company has to hail towards the ROC and give its proposed business idea and location of starting a business. Based on the documents, the ROC provides the investor with a ‘certificate of registration’, which includes the date and incorporation number of the firm registered. This certificate is of great importance and serves as an evidence that shows that the company is valid and registered in India.