Foreign Company Starting Business in India

The initiative by Government of India under the “Make in India” campaign has attracted many foreign companies across the world to invest in India or to open their own branch in India.

It’s not that easy for a foreign company to start its business in India.

There are many approvals which are to be taken and, numerous regulations which are to be followed.

Are you a foreign company willing to start your own business in India?

Well, in that case, let us help you understand all the regulations that you will have to follow while you start your business in India.

Let us first understand the concept of foreign companies in India.

WHAT DO YOU MEAN BY A FOREIGN COMPANY IN INDIA?

“Foreign Company” as per section 2 (42) of Companies Act 2013 is defined as any company or body corporate which is located outside India and

  1. has its place of business in India either by itself or through an agent, physically or through an electronic mode;

and

  1. conducts any business activity in India in any other manner. 

After understanding the concept of foreign companies in India, let us go through the requirements of a foreign company while getting itself registered in India.

REQUIREMENTS

For a foreign company to start its subsidiary company (i.e. private company) in India, minimum of two people and a place of business in India are required.

For a private limited company to be registered in India, a minimum of two directors and two shareholders are required.  As per section 149 (3) of Companies Act, 2013, for any private limited company to be registered in India; it is necessary that at least one director be and Indian citizen and resident.

An authorized representative is to be appointed by the foreign company to register its Indian subsidiary company. 

The authorized representative will be responsible for whole of the registration process and communication with the MCA for the same.

A place of its business in India is also required which will be considered as its registered office. The city in which the registered office of the company is situated will also be treated as the place of legal jurisdiction for the company.

Let us now comprehend the registration process for a foreign company willing to start its business in India.

REGISTRATION OF A FOREIGN COMPANY STARTING BUSINESS IN INDIA

Any foreign company within 30 days of establishment of its place of business in India must submit the following documents with the Registrar for registration as per section 380 (1) of Companies Act, 2013:

  • a certified copy of the charter, statute or memorandum and articles of the company or any other instrument establishing or defining the constitution of the company and if the document is not in English language, a certified translation thereof in the English language;
  •  Full address of the registered office of the company;
  • Details of the all the directors and secretary of the company;
  • Name and address of the resident authorized representatives who can accept on behalf of the company service of process and any notices or other documents required to be served on the company;
  • Full address of the office of principal place of business in India;
  • details of opening and closing of a place of business in India on earlier occasions;
  • declaration that none of the directors of the company or authorized representative in India has ever been condemned or barred from formation of companies and management in India or abroad; or
  • other prescribed specifics.

Apart from the above mentioned, a list of directors and secretary also needs to be sent to the Registrar under Rule (3) of Companies (Registration of Foreign Companies) Rules, 2014.

Within a period of 30 days of establishment of its place of business in India, the foreign company must file form FC -1 of Companies (Registration of Foreign Companies) Rules 2014 along with an attested copy of the approval from the Reserve Bank of India under Foreign Exchange Management Act,1999 or Regulations and from other regulators, if any.

After understanding the registration process of a foreign company starting its business in India, let us now go through the regulatory provisions under Foreign Exchange Management (Establishment in India of Branch or Office or other place of business) Regulations, 2000.

REGULATORY PROVISIONS UNDER FOREIGN EXCHANGE MANAGEMENT (ESTABLISHMENT IN INDIA OF BRANCH OR OFFICE OR OTHER PLACE OF BUSINESS) REGULATIONS, 2000

A foreign company willing to start to set up its business operations in India can also do so through a Liaison Office / Representative Office, Project Office or a Branch Office which is governed under the provisions of Foreign Exchange Management (Establishment in India of Branch or Office or other place of business) Regulations, 2000.

Such companies will have to make an application in form FNC. It may be noted that RBI has authorized AD Category I bank to forward FNC along with the necessary enclosures along with the comments and recommendations to – The Chief Manager-in-charge, Reserve Bank of India, Foreign Exchange Department, Central Office Cell, New Delhi.

The requests will be considered by Reserve Bank of India under Reserve Bank route or Government route.

Hope reading this would help you in understanding the process for a foreign company to start its business in India.

Also, in case if you want any further clarities related to how can a foreign company start its business in India, please fill in the below form and our experts will get back to you.