Procedure for Foreign Company Registration in India

Indian government introduced various measures like such as PM Gati Shakti, single window clearance, GIS-mapped land Bank, reduced corporate tax rates, Make in India initiative to encourage foreign investment. Setting up and running Foreign company in India from requires compliance with various laws and regulations in India such as Companies Act 2013, Income tax Act 1962, FEMA 1999, SEBI Act, SCRA 1956, etc. India is developing country and have mass population this attracts Foreign companies to start business in India. India is welcoming foreign investments and making ease of doing business in India easy. Before start company formation process , owns need to give thought on entry strategy in India from taxation point , compliance points etc. A foreign national can establish a foreign company as a private limited company in India. FDI of up to 100% into a private limited company is permitted under the FDI policy under the automatic route. This article mainly gives guidelines about procedure for Foreign company registration in India.

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What is mean by Foreign Company in India?

Definition of Foreign Company is given in Section 2(42) of Companies act,2013 –

A foreign company is a company incorporated outside India but,-

i) Has a place of business in India whether through agent or itself, either physically or through electronic mode

ii)conducts business activity in India in any other manner. 

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Entry Strategy into India for Foreign Company in India:

There are mainly 3 ways of entry strategy into India for Foreign Company in India:-

1.Wholly Owned Subsidiary:– For an Indian company to Become Wholly Owned Subsidiary Company of a Foreign Company, a foreign company needs to invest 100% FDI in that Indian company through automatic route, for the purpose of foreign company registration in India.

2.Joint Venture:- It is important for the foreign company to elect a local partner with whom it wants to enter into a joint venture. A Memorandum of Understanding or a Letter of Intent is to be signed which will state the basis for the joint venture agreement. A thorough discussion of all the terms should be done and they must be consistent with regional as well as international law.

3.Registration by way of Branch office, Liaison office, Project office :-  In this RBI and Government approvals are needed, which makes this route cost and time consuming.

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Condition for Setting up Foreign Company in India

Following conditions must be satisfied by foreign company to get registration in India:-

1. For incorporating, Private Limited company in India, it is must to have minimum 2 directors (individual) and minimum 2 shareholders (can be individual or entity).
2. At least one director of company must be Indian citizen and resident .
3. An address in India , considered as registered place of business and all communications are send there.

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Who Can become Share holder ?

Shareholders are members of company and according to provisions specified in Companies act,2013- any person can become shareholder of company. Person includes:-

i) Individual (Minor is not allowed to be shareholder)

ii) Hindu Undivided Family (HUF)

iii) Company , Limited Liability Partenrship (LLP)

iv) Pertnership firm

v )Foriegn national/ NRI

vi) Foreign company

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Documents Required for Foreign Company Registration in India

Following  details are required for registering Foreign Company  in India :

1. Proof of identity and residential address- Self-attested PAN and Aadhar
2. Mail id and phone number
3. Passport Size photo
4. Director Identification Number (DIN) of all directors
5. Digital Signature (DSC) of all directors
6. Registered office address and address proof

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Following more details are required from Foreign Nationals acting as Directors :

• Foreign directors who serve as a Director in Company will have to submit a copy of their Passport along with address proof and Bank statement. Original documents must be notarized by notary in home country and by Indian embassy in country of Foreign director.
• In case of Foreign company want to register subsidiary company with same name then Board resolution need to pass in parent company and submit to India. Corporate entity is required to submit Board resolution along with Notice of resolution and Certificate of Incorporation of foreign company.

The advantage of foreign company registration in India is  that it does not require presence of any foreign director in India.  Registering Company in India from USA is complete online process and simple.

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Translation of Foreign Language Documents

All documents required for Foreign company setup is needed in English language. If not then such documents ( Like Passport , Driving license , Bank statement ) need to be translation in English. If such translations are made outside India, the following individuals can certify it through their signature and seal:

The official having custody of the original

• A notary of the country where the company with incorporation
• If a country lies outside the Commonwealth, a diplomat or a consular officer is empowered to do so.
• If such translations are made in India, the following individuals can certify it through their signature and seal:

An advocate, an attorney, or a pleader entitled to appear before any High Court

Further, an affidavit of a competent person having, in the opinion of the Registrar, an adequate knowledge of the language of the original and of English.

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Steps for Registration Of Foreign Company As Private Limited company

Once company is ready with all required documents as given above,You  can go for process  for registration of Foreign company in India. It will take around 10-12 business days provided all document are correct and company will have unique name. If any clarification issued it may take up to 15 working days.

Name approval stage is primary stage for any company incorporation. You can apply for Name reservation in SPICe Part A or they can apply for name reservation and company incorporation in consolidated SPICe form too. As per Rule 8 of Companies Rules 2014, if a foreign company is incorporating its wholly owned subsidiary in India , then original name of holding company as it may be allowed with the addition of word India or name of any Indian state or city. The name shall be considered undesirable if the proposed name implies association with an embassy or consulate of foreign government.If name satisfy all the conditions then ROC will approve the proposed name.

After name approval, Board Resolution and Power of Attorney in favour of authorized signatory, and Memorandum of Association (MoA) & Articles of Association (AoA) need to be drafted. Form DIR- 2 (document in which an individual declares his consent to be appointed as a Director of a company) & INC-9 (declaration that the subscribers and directors will have to submit to memorandum of company to show that they are non-convicted under any act and non-guilty of any offence) is to be submitted. On submission of this documents and paying requisite fees Certificate of Incorporation of Foreign Company in India is issued by ROC.

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Cost of Foreign  Company Registration in India

The Cost to register a Wholly owned subsidiary as Private Limited Company in India would vary from INR 15,000/- to INR 30,000/- depending upon the No. of Directors, No. of members, authorized share capital and Professional fees. Professional fees may depend upon the complexity of the task.

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Bank Account Opening for Foreign Company in India

At time of Company registration directors can given name and branch detail of Bank in which company want to open current account. After company formation company need to contact bank branch for opening bank account. Foreign nation visit to India for opening bank account is not needed. With help of resident Indian director company can open bank account. Bank account opening is simple and take time line between 2-4 working days. Maker checker features for payment transfer is available with major bankers.

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Fund transfer from Foreign Company to Indian Company 

Transfer of money from foreign company incorporated outside India to India is permitted by RBI only through banking channels. Following modes are generally used to transfer funds from Foreign company to India-

i)Demand drafts, cheques (personal and bankers), international money orders

ii)Foreign currency in forms of notes, coins, traveller’s cheques, etc.

iii)Money Transfers or Telegraphic Transfers through banking channels

iv)Rupee Drawing Arrangement (RDA)

v)Money Transfer Service Scheme (MTSS)

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Annual Return of Foreign Companies Registered in India

As per prescribed rules, every Foreign company registered in India is mandatorily required to prepare and file annual return  within 60 days from end of financial year in Form FC-4 to registrar of companies with prescribed fees .

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Post Registration compliances of Foreign Companies Registered in India

Once foreign company is registered in India, it have to comply with various annual and other compliances as per law. Some mandatory compliances applicable to foreign companies registered in India are-

• Form FC-1: Foreign companies registered in India are required to file “Form FC-1” within 30 days from establishment of place of business in India. This application must be submitted with attested copy of approval from RBI under FEMA compliance and from other regulators if needed.
• Financial Statements: Financial statements of Foreign companies registered in India are required to be prepared in accordance with Schedule III of Companies act,2013 . Along with financial statements following documents and details are also required to be furnished:-

i)Statement of associated party transaction

ii)Statement of repatriation of profits

iii)Statement of transfer of funds (including dividends if any)

iv) Consolidated financial statemnts (if applicable )

All these documents are to be submitted to ROC within 6 months from end of financial year.

• Form FC-3: Foreign companies registered in India should give details about list of palace of business in India in Form FC-3 along with financial statements submission to ROC.
• Form FC-4 : Foreign companies registered in India should file annual return within 60 days from end of financial year in Form FC-4 to registrar of companies with prescribed fees .

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Conclusion

Foreign Company Registration in India is online process ( No need to visit India for registration)

Company require Minimum 1 Local resident director.

Foreign company / Director can hold majority of share capital

Company formation may take time between 10 to 20 Days appx.

Foreign Company need to deposit share capital amount in Indian company bank Account

Foreign national can open company bank account without visiting to India and can control bank from out of India

Repatriation of profit share dividend from India is subject to taxes

Foreign Company need to comply Indian compliances under GST , Labour Law , Income tax , ROC etc.

Making changes in company address , director etc. is online and easy process

You need Professional CA , CS to advise and setup Company in Indian and manage compliances

If your selling looking for brand establishment in India then trade mark registration is needed

Financial year in India is April to March

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We A N Bhuatda & CO , Chartered Accountant In Indian helped companies from USA , Japan , Australia , Canada for company registration and post registration compliances. We have team to CA , CS , MBA to take care of your business setup. We are certified partner of Zoho Books. Contact us at _91 80555 66789 or mail us at office@anbca.com.

Indian Subsidiary

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