Company Registration in India by Foreigner

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Company Registration In India

India is one of the rising progressive countries in the world which holds the enormous humanistic potential and an immense market covering of 1.35 billion people. Glancing at the immerse market in India and the vast potential which lies here, there has been a considerable amount of Foreign Direct Investments into the country.

Trends reveal that the FDI inflow in India is increasing every year due to the various foreign businesses & Businessmen starting their operations in this country.

The foreign direct investment is open to most of the sectors in India under the automatic route of approval. Registering a company in India is simplified by the current Government, wherein an application is made in one e-form, known as Spice Form to the registrar of companies.

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Overview on Company Registration in India (FDI)

100% Foreign Direct Investment is open in the majority of the sectors in Private Limited Company India under the automatic route of approval. The Indian Government is intent on increasing foreign investment in India and has taken several policy decisions to encourage FDI. The FDI Policy in India is regulated by the Department of Industrial Policy and Promotions (DIPP), Ministry of Commerce and Industry.

Registering a company in India is simplified by the current Government, wherein an application is made in one e-form, also known as Spice Form to the registrar of companies.

Primary Requirements

Two Shareholders

Any person like a Individual, foreigners or foreign entities can be a shareholder in the subsidiary company. Minimum two person is required to be the first shareholders of the company whereas the maximum number of shareholders in a private limited company can be upto 200.

Two Directors

The first necessary condition is to have a resident director, any person staying in India for 182 days is said to be a resident. The minimum number of directors which a company must have is two while the maximum number can be 15 which can be further increased after incorporation if the need arises.

Registered Address

The proposed company must have a physical address where the registered office of the company shall be situated in India. A proof of such address and a No Objection Certificate from the owner of the premises shall be submitted to the registrar of companies during registration process.

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Advantages of Company Registration in India

Convenient & Easy

Nowadays, it is very easy to incorporate a Private limited company through mere filing simplified e-form (SPICe) electronically. The Ministry has also integrated the System with the CBDT. On approval of SPICe forms, the Certificate of Incorporation is issued with PAN and TAN as allotted by the Income Tax Department. More than 90% of applications are being approved within one working day.

Easy Fund Raising

The company registration process is stringent enough to make this structure conceivable among others which makes fundraising or borrowing from external sources more accessible. The organization can raise equity capital from persons or entities interested in becoming a shareholder. A Company is a must for Entrepreneurs looking to raise money from angel investors, venture capital firms and private equity firms.

Separate Legal Existence

Once the Company registration is done and certificate of incorporation has issued, a legal entity is born in the eyes of the law. Private Limited Company is separate from its owners and managers. The company operates on its own name by merely opening a bank account to own assets and enter into contract with parties. This also provides the right to sue third parties in case of any defaults.

No Minimum Capital

Companies Act, 2013 prescribes the minimum share capital for private company registration. Where the minimum criteria are provided to keep Rs 100,000 as Authorized Capital, the requirement of minimum paid-up capital has been removed by said Act. No minimum capital is prescribed, and it should be based on business requirements.

Rights Separation

Private Limited company owned by a group of members called shareholders and run by the person called directors. The separate management & ownership help both – the company and the management to focus on their potential works. The shareholders assign responsibility to operate and run the company without losing control in the form of voting.

Limited Liability

Limited liability is a type of legal formation for an organization where a corporate loss of owners will not exceed the amount invested by them. Shareholders are legally responsible for the debts of a company only to the extent of the nominal value of their shares. In other words, Owners private assets are not at risk if the company fails.

Documents Required for Company Registration in India

Documents (1)

Document From Mother/Holding Company (If Applicable)

Certificate of Incorporation
AOA/MOA or Charter Document
List of Shareholders and Director of the foreign company
Board Resolution Approving incorporation of a Subsidiary Company in India
Power of Attorney in the name of Authorised Representative

Document From Indian Resident Director or Shareholder

Colour Photograph – 4
Pan Card (Issued by Income Tax Department)
Identity Proof (One from Voter ID Card/ Driving License/Passport)
Address Proof (One from Bank Statement/ Electricity Bill/Telephone Bill/Mobile Bill)

Document From Foreign Director/ Shareholder/Authorised Signatory

Two colour photograph of each Promoter
Copy of Passport and National ID Card
Pan Card Copy issued by the Indian Government (If any)
Address Proof (Telephone Bill / Utility Bill / Bank Statement)
Business Visa in case the foreign person is in India

Proof Of Registered Office In India Of The Proposed Company

Rent Agreement of premise or
Electricity Bill in name of the owner to the premises or
Water/ Gas Bill in the name of the owner of the premises or
Lease deed, sale deed, Property Tax Receipt
NOC from the Owner of the establishment

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Process for Company Registration in India

Step 1 – Documentation and Questionnaire

Our Relationship Manager will reach out to you for the collection of the required information & documents of the promoter for registration of the Company. Data & documents can be submitted online. Once data is received, it is verified by our secretarial team and ensures that the documents are updated and accurate.

Step 2 – Obtaining Digital Signatures

The filing process starts with the issue of a digital signature for all the promoters of the proposed company. Our digital signature application is completely online & OTP based, the applicant would have to complete OTP verification and a video KYC check

Step 3 – Filing for Name Availability

The first step to incorporate Private Limited Company is the reservation of the name. RUN (Reserve Unique Name) form needs to file for ascertaining availability and reservation of the name of the Company. It is a web-based application form and where two names in order of preference can be filed with the Main object of the business. The proposed name must be unique and should not be similar to an existing company or LLP name or a Trademark

Step 4 – MOA and AOA drafting

Once the name is approved, We draft Memorandum of association and Articles of Associate. MOA is the legal document that needs to be filed with the Registrar of Companies at the time of incorporation of the Company. MOA also defines its relationship with shareholders. Memorandum of association is accessible to the public and describes the Company’s name, address of registered office, names of shareholders and the shareholding. AOA serves as the constitution of the Company that defines all the rules and regulations that must be complied by the Company.

Step 5 – Filing of Incorporation

Once the name of the business is deemed as reserved by the Registrar of Companies, an application for registration of Company along with the signed form & Documents need to file in Spice e-Form on MCA portal followed by paying the prescribed fee. The Government fee for company Registration depends on the proposed capital of the Company. On submission of the complete documents, the Registrar after satisfying will register the Company and will issue a certificate of incorporation. The Ministry has also integrated the System with the CBDT. On approval of SPICe forms, the Certificate of Incorporation is issued with PAN and TAN as allotted by the Income Tax Department. However, the physical PAN card is directly dispatched to the registered address of the Company.

Step 6 – Bank Account and FDI report filing

Once the company gets incorporated, You can open the Current Bank Account in the name of the company. The entire subscribed share capital as shown in the MOA of the company must be deposited in the bank account. Then the capital amount Company is required to comply with the reporting norms under foreign investment to RBI. On receiving the application money from non-residents, a Private Company needs to intimate foreign exchange department in RBI within 30 days of receipt along with the details like name and address of foreign investor.

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FREQUENTLY ASKED QUESTIONS

What are the minimum requirements to be a director in the Company?

A Private Limited shall have a minimum of two directors and maximum 20 (needs to be over 18 years), and they must be a natural person, and at least one of them shall be a resident in India. [body corporate may become a shareholder of Company}

What is a Digital Signature Certificate (DSC)?

DSC is a secure digital key that is issued by the certifying authorities to validate signing and certify the identity of the person electronically while filing documents in e-forms.

What is the Director Identification Number (DIN)?

Director Identification Number (DIN) is a unique identification number and allotted by the Ministry of corporate affairs to the person who wishes to appoint as a director of a Company. DIN never expires, and a person can have only one Director Identification Number (DIN).

What are the sectors where FDI is under approval route?

FDI under the automatic route is not permitted for the following sectors. Hence, prior approval of the FIPB is required.

Petroleum sector (except for private sector oil refining)
Investing companies in Infrastructure & Service Sector
Defense and strategic industries
Atomic minerals
Print media
Broadcasting
Postal services
Courier services
Establishment or operation of satellite
Development of integrated township
Tea sector
Asset Reconstruction Company

What are the sectors where FDI is prohibited completely?

FDI in the following sectors is prohibited completely:

Atomic Energy
Lottery business including government and online lottery.
Gambling and betting
Chit funds
Nidhi Companies
Trading in transferable development rights(TDRs)
Real estate business or construction of farmhouse except for the development of townships, roads or bridges, city, and regional infrastructure, etc.,
Manufacturing of cigarillos, cigars, cheroots and cigarettes of tobacco or tobacco substitutes
Activity/sector not opened to private sector investment [e.g. Atomic energy and Railway Transport (other than Mass Rapid Transport Systems)]

Can Virtual Office or Co-working office addresses be registered as an office of the Company?

Companies need a physical mailing address to register their businesses. A registered office address is required at the time of incorporation and must be maintained by the Company. Every Company needs to maintain books of account and statutory records at its registered office. Hence it should be a lockable area.

How much time will be taken to register a private limited company?

What are the applicable income tax rates for a Private Limited Company ?

Private Limited Companies are treated as a separate legal entity and must also register as a taxpayer on its own. Private Limited companies are taxed at a rate of 22.5% on taxable income.

What is authorised capital of the private limited Company?

The Authorized Capital means a maximum amount of capital that a company can raise through the issue of shares to the shareholders.
Authorised capital can be increased at any point of time in future by following necessary steps as prescribed in the Companies Act 2013.

What is Paid capital of the private limited Company?

Paid-up capital is an amount of money which has received from shareholders in exchange for shares issued to the shareholders and payment was made by the shareholders.