Foreign Nationals Company Incorporation in India

Posted on March 8, 2020 by Fastlegal Team

Investment in India by Foreign Company will be in accordance with FDI Policy in India, so foreign nationals incorporating a company in India are required to check out the required permission ( how much FDI is allowed in India for particular Sector ) under the Foreign Direct Investment (FDI ) policy If we take an example of Technology Company, FDI policy permits 100% FDI policy under Automatic route.

1. Automatic Route

2. Approval Route

#1. Automatic Route: In this route, prior approval of Government is not required, the only intimation is required to RBI in the Form FC-GPR, FDI Policy provides sectors where FDI is allowed at what percentage of Equity Capital of the Company.

#2. Approval Route: This is route prior approval of government is required, where FDI is allowed under approval route under FDI Policy.

Foreign Nationals Company Incorporation Procedure :

With the Increase ranking of India in ease of doing business, Company Incorporation Process is the main reason due to governments efforts on simplification process in registering or setting up a company in India, Here is a step by step guide on setting up a company by Foreign Companies :

#1. Getting the Documents Notarized and Apostle of Foreign Nationals :

Indian companies Act requires that the Documents for foreign Directors and Foreign Investor or Shareholders should be notarised and Apostle, Documents may also be signed in India if the applicant is in India on Business Visa. Documents of foreign entities like

Certificate of Incorporation
Charter documents like MOA AOA,
Resolution by Board of Directors of Foreign Entities should be all in English Language and certified translated copy in English copy along with Notarised and apostle.

foreign nationals — Foreign Nationals Company Incorporation

#2. Indian Resident Director:

Indian companies act requires that every company in India should have at least on resident Director who is resident in India during the financial year, we at Fastlegal provides resident Director appointment services in India, you may avail our services if you do not have your own person.

#3. Registered Office Address for Company :

Every Company in India should have a Registered Office Address situated in India, you need to have one place as a Registered Office address. Fast legal helps in getting the registered Office address.

#4. Name Approval Application

Company name approval application is required to be made for availability of name of the company, the company name should be unique, no other company or LLP or trademark should be already there.

#5. Digital Signatures of Directors and Subscribers ( Foreign Nationals and Indian Resident Director ):

We need to obtain a digital signature in the name of Directors and shareholders from certifying authorities in India, Fastlegal team members help in getting the DSC. DSC is required for signing the incorporation documents that are required to be submitted to the Registrar of companies.

#6. Application for Incorporation of Company :

Once all the required documents of foreign nationals and Indian Resident Director are fine and digital signatures have been obtained than incorporation application is required to be submitted. All applications are verified by the registrar of companies and once he is satisfied with all the particulars of the application, he MCA issues a certificate of incorporation to the company.

#7. Company Bank Account :

The company bank account is now mandatory Opened along with the Incorporation application, Indian Company may open a separate Bank Account also.

#8. Funding of Subscription Money into company bank account :

Now subscription money for equity capital is required to be invested into the company by the subscribers to the company.

#09. Filing of Form FC-GPR to RBI

#10. Application for GST Registration

#11. Filing of Business Commencement Application to ROC

Once the Subscription money is entered in Companies Bank Account, the company is required to file business commencement application to Registrar of Companies online

Documents Required for Incorporation of Company by Foreign Nationals :

Apostle and Notarized Signed Documents are required for foreign Shareholders and Directors.

For companies it will be :

Certificate of Incorporation,
Memorandum of Association,
Articles of Association,
Board Resolution duly passed for entering and forming Company in India and

for Foreign Directors :

Passport Copy,
Driving Licence and
Current Address proof in the form of a Bank Statement is required.

Please email us at mail@fastlegal.in or place your request below for your company formation requirements in India

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Procedure for Setting up Branch Office(BO), Project Office (PO) and Liaison Office (LO) in India

Posted on January 22, 2019 by Fastlegal Team

Foreign Companies Setting up Branch Office(BO), Project Office (PO) and Liaison Office (LO) in India is required to make application to AD category Banks through which it wishes to peruse Banking Operations

Eligibility Criteria for Setting up Branch Office / Project Office or Liaison Office in India

The Applicant Company Should be Body Corporate Incorporated Outside India
For Branch Office — a profit making track record during the immediately preceding five financial years in the home country and net worth of not less than USD 100,000 or its equivalent.
For Liaison Office — a profit making track record during the immediately preceding three financial years in the home country and net worth of not less than USD 50,000 or its equivalent.

Note:
An applicant that is not financially sound and is a subsidiary of another company may submit a Letter of Comfort (LOC) (Annex A) from its parent/ group company, subject to the condition that the parent/ group company satisfies the prescribed criteria for net worth and profit.

Net worth :

Net Worth [total of paid-up capital and free reserves, less intangible assets as per the latest Audited Balance Sheet or Account Statement certified by a Certified Public Accountant or any Registered Accounts Practitioner by whatever name called].

Cases in Which RBI Approval is required for Setting up Branch Office(BO), Project Office (PO) and Liaison Office (LO) in India

The applicant is a citizen of or is registered/incorporated in Pakistan;
The applicant is a citizen of or is registered/incorporated in Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong or Macau and the application is for opening a BO/LO/PO in Jammu and Kashmir, North East region and Andaman and Nicobar Islands;
The principal business of the applicant falls in the four sectors namely Defence, Telecom, Private Security and Information and Broadcasting.
The applicant is a Non-Government Organisation (NGO), Non-Profit Organisation, Body/ Agency/ Department of a foreign government.

Procedure for making Application to AD-Category Bank for Setting up Branch Office(BO), Project Office (PO) and Liaison Office (LO) in India

If the Applicant Company fulfills the above mentioned eligibility Criteria , the Application can be made to AD category Bank through which applicant company wishes to peruse Banking Relations

The Application shall be made in Form Form FNC to a designated AD Category – I bank along with Following Documents :

Copy of the Certificate of Incorporation / Registration; Memorandum of Association and Articles of Association attested by the Notary Public in the country of registration.

[If the original Certificate is in a language other than in English, the same may be translated into English and notarized as above and cross verified/attested by the Indian Embassy/ Consulate in the home country].
Audited Balance sheet of the applicant company for the last three/ five years in case of branch office/liaison office respectively.

[If the applicants’ home country laws/regulations do not insist on auditing of accounts, an Account Statement certified by a Certified Public Accountant (CPA) or any Registered Accounts Practitioner by any name, clearly showing the net worth may be submitted]
Bankers’ Report from the applicant’s banker in the host country / country of registration showing the number of years the applicant has had banking relations with that bank.
Power of Attorney in favor of signatory of Form FNC in case the Head of the overseas entity is not signing the Form FNC.

The AD Category-I bank shall after exercising due diligence in respect of the applicant’s background, and satisfying itself as regards adherence to the eligibility criteria for establishing BO/LO/PO, antecedents of the promoter, nature and location of activity of the applicant, sources of funds, etc., and compliance with the extant KYC norms grant approval to the foreign entity for establishing BO/LO/PO in India. The AD Category-I banks may frame appropriate policy for dealing with these applications in conformity with the FEMA Regulations and Directions, However RBI will issue LIN to every BO/LO.

The validity period of an LO is generally for three years, except in the case of Non-Banking Finance Companies (NBFCs) and those entities engaged in construction and development sectors, for whom the validity period is two years only. The validity period of the project office is for the tenure of the project.

Once applicant that has received a permission for setting up of a BO/LO/PO shall inform the designated AD Category I bank as to the date on which the BO/LO/PO has been set up. The AD Category I bank in turn shall inform Reserve Bank accordingly. In case an approval granted by the AD bank has either been surrendered by the applicant or has expired without any BO/LO/PO being set up, the AD Category I bank shall inform RBI accordingly.

Fastllegal provides Business setup Services for foreign Entities in India , companies may contact at mail@fastlegal.in or Place a request at https://fastlegal.in/place-your-request.html

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How Indian company can an receive foreign investment

Posted on October 25, 2018 by Fastlegal Team

The routes under which foreign investment can be made is as under:

Automatic Route: Foreign Investment is allowed under the automatic route without prior approval of the Government or the Reserve Bank of India, in all activities/ sectors as specified in the Regulation 16 of FEMA 20 (R).
Government Route: Foreign investment in activities not covered under the automatic route requires prior approval of the Government. Procedure for applying for Government approval is given at http://fifp.gov.in/Forms/SOP.pdf

What are the Capital instruments permitted for receiving foreign investment in an Indian company

‘Capital Instruments’ means equity shares, debentures, preference shares and share warrants issued by the Indian company.

Equity shares: Equity shares are those issued in accordance with the provisions of the Companies Act, 2013 and will include partly paid equity shares issued on or after July 8, 2014.

Share warrants: Share warrants issued on or after July 8, 2014 will be considered as capital instruments.

Debentures: ‘Debentures’ means fully, compulsorily and mandatorily convertible debentures.

Preference shares: ‘Preference’ shares means fully, compulsorily and mandatorily convertible preference shares.

Non-convertible/ optionally convertible/ partially convertible preference shares issued as on and up to April 30, 2007 and optionally convertible/ partially convertible debentures issued up to June 7, 2007 till their original maturity are reckoned to be FDI compliant capital instruments. Non-convertible/ optionally convertible/ partially convertible preference shares issued after April 30, 2007 and optionally convertible/ partially convertible debentures issued after June 7, 2007 shall be treated as debt and shall require conforming to External Commercial Borrowings guidelines regulated under Foreign Exchange Management (Borrowing and Lending in Foreign Exchange Regulations), 2000, as amended from time to time.

What is meant by Foreign Investment, Foreign Direct Investment and Foreign Portfolio Investment?

Foreign Investment means any investment made by a person resident outside India on a repatriable basis in capital instruments of an Indian company or to the capital of an LLP.

Foreign Direct Investment (FDI) is the investment through capital instruments by a person resident outside India (a) in an unlisted Indian company; or (b) in 10 percent or more of the post issue paid-up equity capital on a fully diluted basis of a listed Indian company.

Foreign Portfolio Investment is any investment made by a person resident outside India in capital instruments where such investment is (a) less than 10 percent of the post issue paid-up equity capital on a fully diluted basis of a listed Indian company or (b) less than 10 percent of the paid up value of each series of capital instruments of a listed Indian company.

Source : https://www.rbi.org.in (FAQ issued by RBI )

Company Setup by Foreign Nationals in India

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How to Register Foreign Subsidiary Company in India

Posted on December 14, 2017 by Fastlegal Team

Setting up a business in India by foreign nationals require registration of Foreign Subsidiary Company in India. India is among the best markets to Invest in the world, during the last two decades India has seen significant improvement of foreign capital in India. Many foreign entities want to start operations in India due to high market demand and ease of doing business, these companies are required to incorporate Foreign Subsidiary Company in India

Following things are to be considered while setting up Foreign Subsidiary Company in India by foreign entities :

Setting up Foreign Subsidiary Company: Foreign Subsidiary will be formed as Private Limited/Public Limited Company and the holding foreign holding company will fund the shareholding. It may be noted that holding company can have 100% to have wholly-owned subsidiary including shareholding of nominee shareholders who will be a beneficial shareholder of the company. The investment limit will be in accordance with the FDI Policy of Government of India, where most of the sectors are under the automatic route.
Requirements for Appointment of Resident Director: As per the requirements of the Companies Act, 2013 every Indian Company should have resident Director.
Documents Requirements: Apostle and Notarized Signed Documents are required for foreign Shareholders and Directors. For companies it will be :
- Certificate of Incorporation,
- Memorandum of Association,
- Articles of Association,
- Board Resolution duly passed for entering and forming Company in India and in case of Individuals
- Passport Copy,
- Driving Licence and
- Current Address proof in the form of a Bank Statement is required.
Obtaining Digital Signature of Directors
Obtaining Director Identification Number of Director
Application for Approval of Name of Company, this must be unique
Preparation of Incorporation Documents
The signing of Incorporation Documents, this too should be notarised and apostle
Application for Incorporation of Company to Registrar of Companies.

Once this application is approved by registrar we get Certificate of Incorporation along with PAN and TAN (Tax Number in India )

Opening of Bank Account of Foreign Subsidiary Company: Now bank Account is required to be opened in the name of the Company.

Infusion of Capital into Foreign Subsidiary Company: Now the Capital is required to be remitted to the bank account of the Company.

Intimation to RBI: Intimation to RBI is required to be given as a par FDI policy.

GST Registration: GST Registration is required to be obtained afterward.

Trademark Application: If the Company has its own product or brand trademark registration application is required to be applied for securing Companies Intellectual Property.