How Foreign Companies Enter in India?

How Foreign Companies Enter in India?

With a population of 1.2 billion people, India is the largest democracy and one of the most promising emerging markets in the world. Therefore, there is an immense interest among the international businesses to tap the emerging opportunities in India and be among the early movers into a rapidly growing market. 

Foriegn companies invest in India due to the abundance of the resources, presence of labour at relatively lower wages and special investment wages such as tax exemptions etc. The government of India has initiated many rules and regulations and policies in order to improve the environment and make doing business in India a lot easier than what it used to be before in order to facilitate registration of wholly owned subsidiary in India by foriegn companies. 

Opening a wholly owned Indian subsidiary: 

Lot of foriegn companies want to do business in India. But, the number of days delay in approval are resulting in drawbacks. Of late, government has realized the aforesaid problems faced by foriegn companies and therefore, taken a lot of steps to decrease the approval time for formation of wholly owned subsidiary in India. 

These include doing away within initial requirements of having Director Identification Number, introduction of new form for instant approval for proposed company name (RUN) and new spice from for applying for final approval for registration. These steps will deliver results in the long run and more and more foriegn companies will opt for opening an Indian subsidiary. 

Major requirements for incorporation of company in India:

To start a company in India, a minimum of two persons and an address are required in India. A company at least should have two directors and two minimum shareholders. According to the Indian rules and regulations, one of the directors’ should be both a citizen as well as a resident of India. In this case, 100% of the shares of the Indian company can be held by the foriegn nationals. The address in India is served as the registered office of the company. Foriegn companies establish their offices in metro cities like Delhi, Mumbai and Bangalore etc. 

But, why India what are the major advantages of doing business in India?

  • Wholly-owned subsidiary: Permits 100% Foriegn Direct Investment under the FDI policy. 
  • Joint Venture: With an Indian partner, for example, strategic partnerships with Indian partner organization. 
  • Limited Liability Partnership: A new arrangement of the business structure in India, that combines the advantages of a company with the benefits of organizational flexibility associated with a partnership. 
  • Skilled workforce: Highly-rates human capital base. 
  • Growth potential: The world’s largest democracy and 2nd fastest growing major company. 
  • Work ethics: professional manner and willing to learn. 
  • Stability of government: Political stability is vital to foriegn investment. 
  • Extensive trade network: Trade network backed by regional and bilateral free trade agreements with numerous trading partners helps leverage investors’ role. 
  • Competitive tax system: Competitive tax regime and comprehensive network of Tax Treaties, further modified by the introduction of Direct Taxes Code and the Goods and Service Tax – single tax for the whole nation. 

Registration of foriegn companies in India step by step:

Registration of foriegn companies in India is a quick and easy process, India is a land of opportunities an untapped potential with a population of more than 1.3 billion people and counting. If you want to know how to register a foriegn company in India? You have come to the right place. Company registration process has made simple and easy after government improved ease of doing business, you must hire a legal consultant who will help you regarding owning a company in India. Unilex Business consultant is one of the fastest growing legal consultancies service providers. Here are the professionals will help you regarding registration of foriegn company in the land of India. But, it is also important to be familiar with the registration process and its related aspects. 

How to register a foriegn company in India as a subsidiary company entry routes for commercial operations. 

As per section 2 (42)  of the Companies Act, 2013, defines a foriegn company as a company or a corporate body incorporated outside India and has a place of business whether by itself, through an agent, in this country. 

Foriegn companies can form a company in India through any of entry strategy mentioned below- 

Wholly owned subsidiaries where 100% FDI is permitted. 

Regular Indian subsidiaries where 100% FDI is not permitted. 

Registering a wholly owned subsidiary in India:

International companies who choose to operate in more than single country can operate its business through a wholly owned subsidiary. Wholly owned subsidiaries can be called as those companies in which parent owns all the shares of the subsidiary which gives access to the parent company to select a board of directors of the subsidiary or control the subsidiary. 

The subsidiary company is a company which can be incorporated by accessing the most shares of the company or either by way of controlling the composition of a board of India. These types of companies are known as Private Limited Companies in India. They are recognized as Indian companies under the Income tax act, and they are also eligible for the deduction and exemption benefits like other Indian companies.  

Following requirements to set up wholly owned subsidiary registration: 

. There must be minimum 2 shareholders.

2. There must be 2 directors, one must be an Indian resident.

3. All the directors must have DIN (Director Identification Number).

4. All the directors must have DSC (Digital Signature Certificate).

5. Less than a month of the incorporation , it is necessary to introduce a minimum paid-up share capital of rupees one lakh

Additional Documents required for Foreign Holding Company

  • Board Resolution for Investment in India
  • Incorporation Certificate of Foreign holding Company
  • INC 9 Declaration in the name of the company
  • All KYC document of Authorised Signatory
  • Registration process of wholly owned subsidiary in India for a foriegn company:
  • A wholly owned subsidiary in India can be set up as a:
  • Public Limited Company Registration in India.
  • Private Limited Company Registration in India.

Here we are going to tell you the procedure of private limited company registration in India for a foriegn company. So let's get started. 

  • Within 30 thirty days of establishing its place of business in India submit the following to the Registrar of companies a list of
  • Directors (Foreign Residency Company), full list along with kyc proof
  • Secretary of such company (Foreign Residency Company ) , full list along with kyc proof
  • File form Form FC-1 with 30 thirty days and make the payment of fees provided in Companies (Registration Offices and Fees) Rules, 2014
  • An attested copy of approval from the Reserve Bank of India under Foreign Exchange Management Act or Regulations
  • Approval is required by such foreign company to establish a place of business in India or a declaration from the authorized representative of such foreign company that no such approval is required.
  • In case of change in documents or subsequent amendments or change in directors or secretaries then a return in Form FC2 along with the fee as provided in the Companies (Rules, 2014 containing the particulars of the alteration, within a period of 30 Days thirty days from the date on which the alteration was made or occurred.

 Filling for name availabilty:

After getting permanent DSC and DIN number. Every companies need to hava a name and the person incorporating it shall select the few as per their perfernces. The name shall be consonance with the subject and the objects of the proposed company and shall not be similar with the existing company. 

Preparing and filing incorporation documents.

After getting the name approval from the ROC, you are required to prepare and filling incorporation documents. 

Documents required:

  • Memorandum of Association;
  • Articles of Association;
  • File a RUN form for incorporation of a wholly owned company 
  • Form 32-particulars of directors;
  • Consent letters from the proposed directors of the company;
  • Coloured photographs of the proposed directors;
  • Power of Attorney in favour of person/consultant to make corrections to incorporation documents and collect the Certificate of Incorporation;
  • In cases where the subscribers/ initial shareholders are persons resident outside India, the MOA and AOA will have to be notarized in the country of their residence and then apostilled.

All the above-mentioned documents are filled in line and physical copy of some of the documents is also filled with ROC. 

Receipt of CIN:

On submission of the above-mentioned documents and payment. ROC verfies all the documents and upon satisfaction ROC allot a CIN number to the foriegn company. 

Final Say:

India offers companies a large, built-in and dynamic potential market to explore. If you are interested in conducting busness in India and looking for the consultant, feel free to contact to Unilex Business Consultant.