Do You Have A Company We Can Setup In India?
Setting Up India Subsidiary
Subsidiary Companies as per the Companies Act, 2013 Act, is as an entity of which the holding company controls more than one-half of the total share capital (either directly or indirectly) or controls composition of the board of directors.. A subsidiary company is an incorporated entity which has an identity of its own, which shall be separate from its holding company. Subsidiaries can be fully owned or partially owned.
Private Limited Company is the most popular form of business entity among foreign investors. A private limited company in India must have a minimum of two directors (persons) and a minimum of two shareholders (can be persons or corporate entities). Further, the incorporation rules in India states that one of the Director of the Company must be both an Indian Citizen and Indian Resident.
Some of the Key Reasons for Incorporating a Private Limited Company are:
A private limited company has a range of legal capacities including opening of a bank account, hiring of employees, taking on equity or obtaining licenses and more as an independent corporate entity.
A company being a separate legal person, is unaffected by the death or other departure of any member and continues to be in existence irrespective of the changes in ownership.
Banks and Financial Institutions prefer to provide funding to a company rather than partnership firms or proprietary concerns.
The signing, filing and transfer of share transfer form and share certificates is sufficient to transfer ownership of a company. In a private limited company, the consent of other shareholders maybe required to effect share transfers.
Private Limited Company being an artificial person, can acquire, own, enjoy and alienate, property in its name. The property owned by a company could be machinery, building, intangible assets, land, residential property, factory, etc., No shareholder can make a claim upon the property of the company – as long as the company is a going concern.
Joint Venture With An Indian Partner (Equity Participation)
The broad steps involved in setting up a joint venture company in India are outlined as under:
Locate an Indian partner.
Form a Joint Venture Agreement setting out the rights and responsibilities of the Parties.
In case the Joint Venture Company is a new company, incorporate a new company (public or private) and invest in agreed ratio. However, in case the investment is being made in an existing company by acquisition of shares by the foreign company, complete the share acquisition procedure.
Commence Joint Venture Business.
Limited Liability Partnership (LLP)
Limited Liability Partnership is always known for less compliance as compared to a private limited company. The foreign nationals/companies can now enter India as Limited Liability Partnership. The LLP makes you responsible only to a limited amount of debts for a company, but requires pre-approval from the government in FDI as compared to the private limited company. FDI in LLP has opened new avenues of opportunities for many foreign companies to enter India.
With 100 percent FDI in LLP, it has become easy for foreign nationals to come and do business in India, yet there are certain norms that you need to know:
An LLP operating in sectors/activities where 100 percent FDI is allowed under the automatic route of FDI scheme would only be eligible to receive FDI.
LLP shall not be eligible to accept FDI in sectors in which less than 100 percent FDI under automatic route.
LLP shall not be eligible to accept FDI in sectors in which FDI is allowed under government approval route.
FDI in a LLP shall always require prior government/FIPB approval.
No FDI in LLP to operate in agriculture, real estate, plantation and print media.
Foreign venture capital investors and FPI or foreign portfolio investors will not be allowed to make investment in LLPs.
In the case of LLP with FDI, that has a body corporate as a designated partner or nominates someone as a designated partner (as defined in Section 7 of LLP Act 2008) must be a company registered under the Company’s Act 2013.
All companies formed as LLP must adhere to the aforementioned terms. Such policies ensure safety the sovereignty of the Indian companies and at the same time lure foreign investment. FDI in LLPs has made it very easy for foreign companies to come in India.
Setting Up Liaison Office
A Liaison Office could be established with the approval of the government 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.
In terms of permitted activities, a liaison office can do the following listed activities in India:
Act as a channel between the Head office and parties in India.
Collect market information and provide information about the products to Indian customers.
Promote exports/Import from/to India.
Promote technical/financial collaboration between parent company and Indian customers.
Open Non-Interest bearing INR current account with Category-1 Banks in India.
Setting Up Project Office
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. The Government of India has now granted general permission to foreign entities to establish project offices subject to specified conditions.
The project is funded directly by inward remittance from abroad; or
The project is funded by a bilateral or multilateral International Financing Agency; or
The project has been cleared by an appropriate authority; or
A company or entity in India awarding the contract has been granted Term Loan by a Public Financial Institution or a bank in India for the project.
Setting Up Branch Office
A branch office is not allowed to carry out manufacturing activities on its own but is permitted to subcontract these to an Indian manufacturer. Branch Offices established with the approval of RBI, may remit outside India profit of the branch, net of applicable Indian taxes and subject to RBI guidelines Permission for setting up branch offices is granted by the Reserve Bank of India (RBI).
Export/Import of goodsRendering professional or consultancy services
Carrying out research work, in which the parent company is engaged.
Promoting technical or financial collaborations between Indian companies and parent or overseas group company.
Rendering services in Information Technology and development of software in India.
Rendering technical support to the products supplied by the parent/ group companies.
Foreign airline/shipping company.
Improving the Ease of Doing Business