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.

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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.

 

Contents

• Setting Up A Business Operations In India

  • 1. As an Indian Company:

  • 2. As a Foreign Company:

    • 2.1. Liaison Office/Representative Office:

    • 2.2. Project Office:

  • 3. Branch Office

• India: An Attractive Destination for Businesses

  • Establishing a company in India – Overview

  • Procedure for setting up a company in India

• How to set up a business/company in India

  •     Proposed name for the company:

  •     Directors and subscribers:

  •     Director Identification Numbers (DIN):

  •     Digital Signature Certificate (DSC):

  •     Memorandum & Article of Association (MOA), (AOA):

  •     Registered Office:

  •     Incorporation:

  •     Post Incorporation:

• Role of Rkv & Associates in Setting up 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).

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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)

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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:

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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.

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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

 

FOREIGN DIRECT INVESTMENTS

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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:

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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.

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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.

   

Registered Office:

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.

   

Incorporation:

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.

   

Post Incorporation:

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.

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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