SETTING UP IN INDIA
The advent of liberalization in India did not manage to inspire confidence in business owners/ entrepreneurs or even the investors and setting up a company or business and operating it in India, continued to seem like a daunting task. However, with the evolutionary change in the governments’ thinking about economic growth through deregulations, corporate ease and infusion of investments via mutually beneficial operational and financial structures for investors, both domestic and overseas/ foreign investments, India now offers a wide range of opportunities to investors in setting up a business/company in India ensuring that it is no longer a distant dream to not just set up a business in India but progress exponentially.
Reinforcing the vision of growth for India and enabling the ease of doing business in India, rkv & Associates provides comprehensive assistance to guide you through the best entry and exit strategy for setting up and operating in India.
SETTING UP A BUSINESS OPERATIONS IN INDIA
There are a number of options available to a foreign investor wanting to set up business operations in India. Taking into consideration that foreign equity in Indian companies can go up to 100%, subject to equity caps in the respective areas of activities under the policy of Foreign Direct Investment (FDI).
1. As an Indian Company:
A foreign company/ investor that wishes to commence its operations in India can begin operations either via (i) Joint Ventures or (ii) a Wholly Owned Subsidiary (subject to 100% FDI permission for the activities being carried out)
2. As a Foreign Company:
India also provides more cost-effective options to a foreign company wanting to test the waters before plunging into full fledge operations:
2.1. Liaison Office/Representative Office:
The liaison office acts as a bridge between a primary place of business i.e. the country of origin and entities in India. No commercial activity can be undertaken in a Liaison Office, and therefore, it does not “earn” in India. Such an office plays a limited role of collecting adequate information about required market opportunities and providing data about the company / its products to the Indian market. However, with RBI (Reserve Bank of India) approvals and other permits, such a representative office can facilitate technical and financial collaborations between a parent company and its Indian partner as well as encourage import & export from/to India.
2.2. Project Office:
To initiate specific projects a foreign entity has the option of setting up a temporary project/site office in India. Such project offices can only carry forward the activities for which they have been permitted to set up. They are limited to execute any activity which does not fall within the scope of the project.
3. Branch Office
Foreign companies requiring a physical presence to conduct their business without the rigmarole of setting up a separate legal entity, have the option of setting up their Branch Offices in India. These branch offices are not permitted to initiate manufacturing activities on their own however they may reallocate the role to an Indian manufacturer.
A branch office of a foreign entity in India is allowed to conduct the following actions in the country:
Import and Export of goods
Rendering professional and consultancy services
Carry forward research work in relation to the business of the parent company
Promoting technical and financial collaborations with Indian and overseas companies on behalf of the parent company
Acting as a buying/selling agent for the parent company in India and representing the parent company in India
Assisting the parent company in the development of software or IT related requirements
Rendering technical support to the parent company with respect to the products or services that the parent company offers
Foreign airlines/shipping company
INDIA: AN ATTRACTIVE DESTINATION FOR BUSINESSES
Among the emerging markets, India is seen as the ideal destination with ample opportunities available to be capitalized on without compromising on the quality, which has attracted major multinational companies around the globe, which are looking for low-cost suitable options to setup business in India.
Establishing a company in India – Overview
Indian economy is one of the fastest-growing economies in the world with GDP growth of around 7 – 8% and a population of over 1 billion as per World Bank Data (2016). The statistics show that India as of now boasts of a profitable and stable economy and has already entered the league of emerging markets thus making it an attractive option for foreign investors.
Procedure for setting up a company in India
Private Limited Company (PLC);
Public Limited Company (PC); or
Limited Liability Partnership (LLP), informally known as a corporation.
Investment sums that are invested by an investor, in such formats, are limited to the company’s shares.
From a foreign company’s point of view, a Private Limited Company (PLC) is one of the highly recommended ways to start a business in India. PLC offers limited liability for its shareholders with certain restrictions placed on the ownership.
HOW TO SET UP A BUSINESS/COMPANY IN INDIA
Incorporation Procedure of a private limited company is governed as per Companies Act 2013 and can be explained through the following steps:
Proposed name for the company:
In order to hold an available name, a series of documentation is to be provided by the applicant such as
The main object of the company
Up to 6 proposed names in order of preference
Details of a minimum of two promoters and
Details of the minimum of two directors.
Upon acceptance of the name, it is held for a period of 60 days and a new company can be incorporated with immediate effect on this.
Directors and subscribers:
For a Private Limited Company, a minimum of 2 directors and 2 subscribers are required, whereas, for a Public Limited Company, a minimum of 3 directors and 7 subscribers are required.
Director Identification Numbers (DIN):
It is recommended for all proposed directors to obtain a DIN.
Digital Signature Certificate (DSC):
A DSC is required to validate the documents digitally, which are sent to the Company Registrar (ROC) or other authorities, such as tax authorities.
Memorandum & Article of Association (MOA), (AOA):
These are mandatory legal documents containing crucial information about the company and sets out the company’s necessary working procedure, its rules, and regulations.
It is mandatory for any company to have a registered office in India from the date of incorporation and it should be publicly accessible for correspondence of documents and notices.
Post acceptance and approval on all legal documents required to incorporate a company by ROC, a certificate is issued and from thereon, a private company can begin its activities. Whereas, for a Public Company, it is required to obtain a Company Start-up Certificate from ROC as well.
The legal work does not end with the incorporation of the company. Post incorporation a company needs to undertake series of Compliances and Statutory Registrations, such as; Opening of bank accounts, maintaining of books, allotment of shares, IT registration, Import Export Codes, Sales Tax registration, Service Tax registration, Central Excise Registration, and others which RKV&A provides to its client on a daily basis as an In-house/ General Counsel legal service.
ROLE OF RKV & ASSOCIATES IN SETTING UP IN INDIA:
Advise on Entry Strategy and structuring of Business set up in India
Identification and selection of the place of business
Incorporation of the Company or Branch or Liaison Office in India
Bank account opening and getting Finance
Getting approvals at various regulatory bodies/agencies
Ongoing compliance with all laws and regulations
Accounts and Payroll maintenance
Compliance with FEMA/RBI for fund transfers
37 Years of Accumulated Practice
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The Law firm is founded by Mr. BN Garg Advocate having 38 years of corporate experience focusing on indirect taxation & company matters. He has been appointed as key attorney in various reputed national Corporates & a trusted advisor to the senior management with a proven track record.
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