Incorporation of Business Entity
• Incorporation of a Company
• Setting up Liaison /Representative /Branch/Project Office
A foreign company planning to set up business operations in India has the following options to set up a business entity:-
• As an incorporated entity under the Companies Act 1956 through JVs or wholly owned subsidiaries
• As an unincorporated entity through liaison office/representative office or project office or branch office of a foreign company. Such offices can undertake activities permitted under the Foreign Exchange Management (establishment in India of branch office of other place of business) Regulations 2000.
Incorporation of a Company
Incorporation of a company in India is governed by the Companies Act 1956. A company could be a private limited company or a public limited company.
A private limited company is one that through its Articles restricts the rights to transfer its shares, limits the number of its members to 50, prohibits any invitation to the public to subscribe for any shares in the company and prohibits any invitation or acceptance of deposits from other than its members.
For registration and incorporation of a company, an application has been filed with Registrar of companies. Application for registration of a company accompanied by the selected names, memorandum of association and articles of association and other necessary documents is to be filed with the Registrar of companies of the State in which the company is proposed to incorporated. The documents required to be filed along with applications are as follows: -
• Memorandum of Association
• Articles of Association
• The agreement, if any, which the company proposes to enter into with any individual for appointments as its managing or whole time director or manager
• A copy of the letter of the Registrar of Companies intimating the availability of the proper time
• Documents evidencing payment of prescribed registration and filling fee
• Documents evidencing the directorship and situation of Registered Office and declaration of compliance with the requirements of Companies Act for giving consent to act as a director.
Upon compliance with all requirements, the Registrar will register the company and issue a certificate of incorporation of company that would bring the company into existence as a legal entity. Once the company has been duly registered and incorporated as an Indian company, it is subject to Indian laws and regulations as applicable to other domestic Indian companies.
For further details please visit the website of Ministry of Company Affairs
A foreign company can establish its place of business in India by filling Form FC-1 (Documents delivered for registration by a foreign company). The eForm has to be digitally signed by authorized representative of the foreign company.
For further details :
Setting up Liaison /Representative /Branch/Project Office
Liaison Office/Representative Office
A Liaison Office could be established with the approval of Reserve Bank of India. The role of Liaison Office is limited to collection of information, promotion of exports/imports and facilitate technical/financial collaborations.
Liaison office cannot undertake any commercial activity directly or indirectly.
Foreign companies planning to execute specific projects in India can set up a temporary project/site offices in India for carrying out activities only relating to that project. RBI has now granted general permission to foreign entities to establish project offices subject to specified conditions.
Foreign companies engaged in manufacturing and trading activities abroad are allowed to set up branch offices in India for the purposes of export/import of goods, rendering professional or consultancies services, R&D, promoting technical or financial collaborations, representing the parent company, acting as buying/selling agents, rendering services in IT and development of software, rendering technical support to the products supplied by the parent/group companies, foreign airline/shipping companies. Branch offices could be established with the approval of RBI and may remit outside India profit of the branch, subject to RBI guidelines after payment of applicable Indian taxes.
For further details please visit :
Procedure for establishing Liaison Office/Project Office/Branch Office
Application for setting up these offices may be submitted to Chief General Manger, Exchange Control Department (Foreign Investment Division), RBI, Central Office, Mumbai in Form FNC through the Authorised Dealer Bank.
Website of Foreign Exchange management Department, RBI http://www.rbi.org.in/scripts/Fema.aspx
Foreign Exchange Management (Establishment in India of branch or office or other place of business) Regulations, 2000 http://www.rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=176
Foreign Exchange Management (Establishment in India of branch or office or other place of business) (Amendment) Regulations, 2003 http://www.rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=1416
Foreign Exchange Management (Establishment in India of branch or office or other place of business) (Second Amendment) Regulations, 2003 http://www.rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=1450
Foreign Exchange Management (Establishment in India of Branch or Office or Other Place of Business) (Amendment) Regulations, 2005 http://www.rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=2469
Form FNC-I for opening a Branch/Project/Liaison Office
Exchange Control manual of RBI
Foreign Exchange Management Act 1999