India has a growing economy and many business opportunities that make it an excellent place to invest for NRIs, foreigners, and businesses from other countries. Many ways can be used to get money from other countries in India. One of the most common ways of foreign company registration in India is to set up a subsidiary company.
The subsidiary firm is in the same situation.
One company is called a “subsidiary,” and another is called a “parent company.” One company owns a majority stake in another company, and the other company is called the “parent company.” If a company owns a subsidiary in another country, that subsidiary is subject to the laws of that country. Thus, a foreign company must follow Indian law if set up in India.
Indian business: How do you start a non-Indian company?
A way to choose a company type
FEMA rules say it is not allowed for a business to have a foreign direct investment (FDI) if it’s a sole proprietorship, partnership firm, or a one-person company. Even though it is legal to invest in LLPs, the RBI must give its approval first.
As a result, NRIs and businesses from other countries can most quickly and easily start a business in India by setting up a Private Limited Company.
Everything you need to get started
It doesn’t count how much money you have to start a business in India to start a Private Limited Company.
To start a business in India, you must have at least two directors. People who want to compete in this competition must have at least one person who lives in India. In India, someone who is a resident has lived in the country for at least 182 days in the last year.
According to the Companies Act, 2013, at least two people must own a private limited company for it to work. Shareholders don’t have to live in the area to be a part of the company. People and businesses of all kinds can own shares in the company.
Documents Needed for a foreign company registration in India
In the case of an Indian Resident Director, they will need a recent picture, a copy of their PAN cards, and one of their government-issued ID cards, like their driver’s license or passport.
A recent picture, a copy of their passport, a copy of their driver’s license, a bank statement, or any other utility bill from their home country.
An address proof (rental agreement for the registered office), utility bill (electricity, telephone, gas, etc.), and a NOC for the use of the premises as a registered office must be shown before the office can be used.
The steps for foreign company registration in India:
Approval of the company name is the first step in becoming a business owner. India must be added to the parent company’s name if it is used in a subsidiary that is outside of the country. If the name isn’t the same as an existing business or isn’t bad for the law, it can go ahead.
The DSC will be bought simultaneously as a Digital Signature Certificate will be given to the company’s future directors (DSC). To file the digital incorporation application and report on compliance in the future, you need a Digital Signature Certificate (DSC).
The third and last step in becoming a business is to fill out an application for incorporation. Memorandum and articles of incorporation and other documents signed by the people who want to run the company must be filed.
To be incorporated, you need these documents:
A company needs to have Articles of Incorporation and Bylaws.
Memorandum of Association
DIR 2: The Declaration of Directors
Form INC 9: The Declaration of Directors/Shareholders and the Persons Who Can Act on Their Behalf.
Foreign company undertakings and directorships under the PAN
Indian nationals have to sign the documents that start a business most of the time. But for people from other countries, the steps are as follows:
An official from the country where the document was signed notarized it and made sure it was consumerized or apostilled by the proper government.
If the documents are signed in India, a copy of the signer’s visa and stamped passport must be shown to show that they are real people.
If the subscriber is from outside of the country, the foreign company’s representative must sign the documents for the company to be formed. In the home country of the subscriber company, a notarized, consumerized, or apostilled letter stating the name of the person who can buy shares and how many claims they want to buy is needed.
A Certificate of Incorporation and a Corporate Identification Number will be given to the new company if the registration application is approved by the Registrar (CIN). The company would get both its PAN and TAN at the same time.
The investment of the Holding Company’s Share Capital and the rules it must follow:
FEMA rules and the Reserve Bank of India’s rules govern foreign investors buying shares in Indian businesses. It must follow the laws of the RBI and the Companies Act 2013 when it invests in its Indian subsidiary’s share capital.
Compliance with the RBI after becoming a company
When a company wants to get money from a foreign investor, there is a two-step process that must be followed:
If the company receives cash from a foreign investor, it must send the RBI an “Advance Reporting Form” in 30 days (s).
Within 180 days of getting financing, the company must give out shares.
It must send the RBI a form called FC-GPR within 30 days of giving out shares, along with the following:
It’s an official document from the company secretary that says the company has followed the Foreign Direct Investment (FDI) Scheme’s rules regarding giving shares.
A certificate from a Chartered Accountant that explains how the method was used to figure out how much foreign investors paid for shares.
Annual Return on Foreign Liabilities and Assets: You must report all investments you made this year in this report!