Overview - Different Options to Start Business In India
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A Non-Indian National / Business incorporated outside India has the following options to setup up a new business in India:
- Limited Company
- Limited Liability Partnership (LLP)
- Branch Office or Liaison/Representative Office, Project Office
A. LIMITED COMPANY
A non-resident Indians and businesses incorporated outside India can incorporate Company in India a under the Companies Act, 2013, as a Joint Venture (JV) or a Wholly Owned Subsidiary.
Foreign Direct Investment (FDI) is freely permitted in Limited Companies subject to the FDI Policy in almost all sectors. Under the FDI Scheme, non-residents can make investments in shares/convertible debentures/preference shares issued by an Indian company through two routes:
- Automatic route: The foreign investor or the Indian company does not require prior approval from the RBI or the Government of India.
- Government route: Prior approvals required from the Government of India
B. LIMITED LIABILITY PARTNERSHIP (LLP)
An LLP is an incorporated business form that combines the features of partnership and the company form of business. The LLP form of organization was introduced in India in April 2009 through the Limited Liability Partnership Act, 2008.
Foreign Direct Investment (FDI) is freely permitted in Limited Liability Partnership subject to the FDI Policy in almost all sectors.
C.BRANCH OFFICE / LIAISON OFFICE /PROJECT OFFICE
Business entities registered outside India (Foreign Company) can establish business operations in India without creating and registering a subsidiary company.
Subject to the RBI guidelines, a foreign company can open a Branch Office or Liaison Office in India. The scope of operations of such offices is typically limited to activities and functions such as country representative office, sourcing, technical and/or marketing support, import and export, etc.
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Start Business in India - Requirements
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Procedure to Start a Business In India
Define the India Business Plan
A Foreign National or a Business Registered outside India has to define the India Business Plan first. Depends on the business operations Plan, one has to select the best suited Business entity option start business in India.
Choose Best Suited Business Option
Choose best suited business from different options such as Limited Company, Limited Liability Partnership (LLP), Branch Office & Liaison Office or Project Office etc.
Depends on the chosen Business option, the documentation process will also differ. Generally, any document executed outside India or a copy of document produced from outside India must be notarized and apostatized or attested by the Indian Embassy in their respective countries as per Hague Convention guidelines.
Application to respective Authorities
Again, depends on the chosen Business option, the application process shall also differ. In case of Limited Companies and Limited Liability partnerships, application is required to be filed with the Registrar of Companies (ROC), Ministry of Corporate Affairs. In case of Branch office / Liaison Office the application is required to be filed with the Reserve Bank of India and after obtaining the approval from the RBI, the entity is required to be registered with Registrar of Companies (ROC) Delhi, Ministry of Corporate Affairs
Obtain the Registration and proceed to Business Start-up Formalities
After obtaining the Business entity registration, the business can proceed to open bank account and proceed to appoint people and start business. Also, the busies is required to obtain other required registrations such as Goods and Service Tax Registration (GST), Professional Tax and Shops and Establishment Registration etc and start employing people
Documents Required from Foreign Body Corporate
If a Foreign Company is a Shareholder/ partner, the business Incorporation documents such as Certificate of Registration and Charter Documents with
- a. The Board Resolution / formal authorisation for use of name of Foreign Body Corporate
- b. Board Resolution / formal authorisation for use of Trademark of Foreign Body Corporate, if any
- c. Board Resolution / Authorisation for execution to an individual for execution of Company Incorporation Documents.
Branch/ Liaison office - Steps
- STAGE 1 : Seeking RBI approval through an Authorised Dealer of a Category I Bank
- STAGE 2 Registration of the branch/liaison office with the Registrar of Companies, New Delhi.
From Individuals for Company and LLP
For Company and LLP registration, the following documents are required from proposed Shareholders / Partners and Directors / Designated Partners
- Copy of valid Passport
- Copy of Identity / Address Proof such as Telephone Bill / Mobile Bill/Electricity Bill / Bank Account Statement must be in the name of applicant and should not be older than 2 months.
- Consent to Act as Director / Designated Partner
- Declaration on Permanent Account Number (PAN)
- Memorandum of Association – MOA to be signed by the subscriber and a witness with details. (For Company)
- Articles of Association – AOA MOA to be signed by the subscriber and a witness with details. (For Company)
- Subscription Documents –to be signed by the Partners of LLP and a witness with details. (For LLP)
Starting a Business In India by Non-Residents
Faq - Start Business in India
1. Limited Company
2. Limited Liability Partnership (LLP)
3. Branch Office & Liaison Office or Project Office
1. There should be 2 promoters/shareholders. The promoters can either be corporates or individuals.
2. There should be 2 individuals with Director Identification Number (DIN) to be appointed as directors.
If the proposed company is a 100% subsidiary of a foreign entity, the second promoter can be a nominee promoter holding a nominal stake for the purpose of complying with the requirement of two promoters.