Indian Entry Strategy:Foreign Company Registration in India

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Indian Entry Strategy Foreign Company
Registration in India
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industry experience and a broad spectrum of
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MEANING FOREIGN SUBSIDIARY (WOS)

• A subsidiary is a company with voting stock (that
  is more than 50) controlled by another company,
  usually referred to as the parent company or the
  holding company.
• A wholly owned subsidiary is a company whose
  common stock is 100 owned by another company,
  the parent company. A wholly owned subsidiaries
  retain legal control over operations, products,
  and processes.
• If a foreign subsidiary is incorporated in India,
  it has to follow the applicable laws in India.

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SELECTING THE TYPE OF COMPANY

• According to FEMA guidelines, Foreign Direct
  Investment (FDI) allowance is as per below Chart

Entities in which FDI is Not allowed Entities where FDI is Allowed Remarks on allowance
Proprietorship LLP Investment in LLPs is allowed, but it requires prior approval of the RBI.
Partnership Private limited Fastest route
One Person Company Public Limited If Parent wants to list or publicly trade on stock exchange in India.

• The easiest and fastest way set up a business in
  India by NRIs and Foreign Nationals/entities is
  through incorporation of a Private Limited
  Company.

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OPTION 1 PRIVATE LIMITED

• A foreign company can set up a wholly owned
  subsidiary in India to engage in business
  activities permitted under Indias FDI policy.
• In addition, two directors are required, with one
  of them being an Indian resident.
• Income tax is

Company Turnover Below 250 Cr. Turnover Above 250 Cr.
WOS (Foreign Company) 25 30

• Surcharge on Income Tax

Company Profit less than 1cr. Profit in range of 1- 10 cr Profit above 10 cr
WOS (Foreign Company) Nil 7 on Tax 12 on Tax

• Dividend Distribution Tax is 20.56

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OPTION 2 LLP

• In India, an LLP is structured as a hybrid
  entity, with the advantages of a company (since
  it is a separate legal entity with perpetual
  succession) and at the same time enjoying the
  benefits of organizational flexibility associated
  with a partnership structure. At least two
  designated partners are required, of which one
  needs to be an Indian resident.
• Taxation at the rate of 30 is applicable on LLPs
• No tax is levied on distribution of profits as
  dividends to partners, unlike in the case of a
  company where Dividend Distribution Tax (DDT) is
  applicable on repatriation.
• Foreign investment in LLPs is permitted in
  sectors where 100 FDI is permitted under the
  automatic route without any performance-linked
  conditions.

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MINIMUM REQUIREMENTS

• Capital There is no minimum capital required to
  form a Private Limited Company in India. Though
  it is always advisable to have a company with 10
  lacs authorised capital.
• Directors Minimum two directors are required to
  incorporate a Private Company in India. Both
  should be individuals and at-least one of whom
  should be a resident of India.
• Shareholders Companies Act, 2013 requires that a
  Private Limited Company have a minimum of two
  shareholders. There is no condition for
  residential status of shareholders. Shareholders
  can be either individuals or entities or a
  combination of both.

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DOCUMENTS SIGNING

• In the documents are signed outside India, then
  the same have to be notarized by a Public notary
  of the residence country and consularized or
  apostilled by the competent authority, as the
  case may be.
• If the documents are signed in India, then copy
  of Visa and stamped passport, proving his/her
  presence in India at the time of signing is
  required.
• If the subscriber is a foreign entity, then the
  Incorporation documents should be signed by the
  representative of the foreign entity. An
  Authorization Letter duly stating the name of
  the Authorized Person and the number of shares
  subscribed should be notarized, consularized or
  apostilled, as the case may be in the home
  country of the subscriber company.
• If a foreign company is incorporating its
  subsidiary company in India, then the original
  name of the holding company as it is may be
  allowed with the addition of word India or name
  of any Indian state or city.

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STEP 1 OBTAINING DIN DSC

• The first step towards Foreign Company
  Registration in India is applying for the DSC
  (Digital Signature) and DIN (Directors
  Identification Number) of the Directors.
• Apostille / Notarized copy of resolution of
  foreign Company mentioning the name of
  authorized representative, no. of subscription of
  shares.
• Apostille/ Notarized copy of Charter of Foreign
  Company.
• Apostille/ Notarized copy of ID Proof of
  authorized representative,
• Proof of Identity (PAN for Indian Nationals and
  Copy of Passport for Foreign
• Nationals)
• Copy of Driving License, Bank Statement or any
  utility bill (not older than two months)
• Residence permits for foreigners, if residing in
  India.
• Passport size photograph
• Name of Nominee (in case of incorporation of WOS)

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STEP 2 NAME APPROVAL

• Selecting a unique and acceptable name for the
  proposed Company is one of the important steps
  in the whole Incorporation process.
• The name should be in consonance with the Object
  of the Company and should not be
• identical to existing entities or Undesirable by
  Law.
• In case if Name of Foreign company is to be used
  with (India) then foreign company has any
  trademark registered than copy of that trade mark
  is required and NOC from company to use the
  name.
• No Re-submission of application is allowed in
  case of reservation of Name. The application
  either Approved or Rejected.
• Reserved name shall be valid for 20 days in case
  of allotment of name for New Company.

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STEP 3 PREPARATION OF DOCUMENTS

1. Memorandum of Association of Company (Physical
   copy of MOA shall be prepare Duly apostille or
   notarized in country of origin).
2. Article of Association of Company (Physical
   copy of AOA shall be prepare Duly apostille or
   notarized in country of origin).
3. INC-9 Affidavit / declaration by first
   subscriber(s) and director(s) (Duly apostille or
   notarized in country of origin).
4. DIR-2 declaration from first Directors along with
   Copy of Proof of Identity and residential
   address. (Duly apostille or notarized in country
   of origin).
5. Declaration from the foreign subscribers in
   respect of not having PAN. (Duly apostille or
   notarized in country of origin)

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STEP 3 CONTINUE

1. NOC from the owner of the property where company
   is to be registered.
2. Proof of Office address (Conveyance/ Lease deed/
   Rent Agreement etc. along with rent receipts)
3. Copy of the utility bills (not older than two
   months)
4. In case of subscribers/ Director does not have a
   DIN, it is mandatory to attach Proof of identity
   and residential address of the subscribers (Duly
   apostille or notarized in country of origin)
5. Digital Signature with only one Subscriber is
   enough for Incorporation of Company.
6. DIR-2 from the Resident Director along with self
   attested copy of PAN and resident.
7. Certificate from Chartered Accountant.

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POST INCORPORATION FORMALITIES

• Step I Open Bank Account to receive
  Subscription Money.
• Step II Receipt of Subscription Money from
  Foreign Subscriber. Step -III Collect FIRC
  Certificate from the Bank as per FDI Guidelines.
  Step IV Issue Share Certificate to the
  subscribers.
• Step V File FCGPR with RBI as per FDI Guidelines.

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TIMELINES
Timelines are shown below in Gantt chart with
expected end date
Sr. No. Nature of Procedure in India 01-05 01-05 01-05 06-10 11-15 16-30 31-45 46-50 51-60 61 -70 71-80
1 DIN for Directors
1 DIN for Directors
1 DIN for Directors
2 DSC for Directors
3 Name Approval
4 MOA and AOA Drafting
5 Assess stamp duties online
6 Filling of Documents and forms
7 Certificate of incorporation
8 Commencement Certificate
9 Register under Shops and Establishment Act
10 Register for GST in the ward in which the companys office is located
11 Register for Profession tax
12 Register with Employees' Provident Fund Organization
13 Register with ESIC
14 Filing for Government Approval before RBI/FIPB for Foreigners and NRI's
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COMPLAINCES
We provide comprehensive support and services for
all your compliance needs

• TDS Compliances

• FEMA Compliances as per FEMA

• Payroll Processing (ESIC EPF)

Act

• Compliances under GST Act

• Statutory Audits under various

• RBI Compliances

laws (GST, Income Tax, Company

• Internal Auditing

Act)

• Accounting and fillings

• DGFT (Director General of Foreign

• Income Tax Fillings

Trade) compliances
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