Foreign Company Registration in India

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Introduction

Under the Companies Act, 2013, a Foreign Company is an entity incorporated outside India but having a place of business or a physical presence in India. This presence reflects visible contact with the foreign company or its operations carried out within India.

Foreign companies can establish their business in India by complying with the relevant provisions of the Companies Act, 2013. There are multiple modes to set up a foreign entity in India:

• Register as an Indian Company under Companies Act, 2013
• Establish a Wholly Owned Subsidiary
• Form a Joint Venture
• Register as a Foreign Company itself
• Set up a Liaison Office or Representative Office
• Establish a Project Office
• Open a Branch Office

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Advantages of Incorporating a Foreign Company in India

• Access to Indian Market: Enables foreign companies to establish a direct presence and tap into the growing Indian consumer and business markets.
• Legal Recognition: Provides a formal and recognized legal status under Indian law for conducting business operations.
• Profit Repatriation: Branch and subsidiary companies can repatriate profits to the parent company, subject to applicable tax and RBI guidelines.
• Multiple Business Activities: Foreign companies can engage in a broad range of business activities, including trading, manufacturing (through subsidiaries), consultancy, IT services, and more.
• Brand Building: Helps enhance the brand image and credibility by having a registered Indian entity.
• Collaboration Opportunities: Facilitates partnerships, joint ventures, and collaborations with Indian firms under a regulated framework.
• Tax Benefits: Eligible for applicable tax treaties between India and the parent company’s home country, reducing the risk of double taxation.
• Ease of Compliance: Modernized online filing and registration processes have simplified the incorporation and ongoing compliance requirements.

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Minimum Requirements for Incorporation of a Foreign Company in India

To incorporate or establish a foreign company presence in India, the following minimum criteria must be met:

1. Business Activities: The company must clearly define the business sector and activities it intends to carry out in India.
2. Profit and Net Worth:
   • For Liaison Office: The parent company must have a profit-making record for the last 3 financial years with a net worth exceeding USD 50,000.
   • For Branch Office: The parent company should have profits in the last 5 financial years and a net worth of at least USD 100,000.
3. RBI Approval: Prior approval from the Reserve Bank of India (RBI) under FEMA 1999 is mandatory for setting up Liaison, Branch, or Project offices unless exempted.
4. Registered Address: The foreign company must have a registered address or principal office outside India and establish a principal place of business in India.
5. Authorized Representative: Appointment of an authorized person in India who can accept service of legal notices and represent the company in India.
6. Documentation: Submission of certified true copies of charter documents (Memorandum and Articles of Association or equivalent), list of directors, and other company particulars.
7. Compliance with Sectoral Regulations: Additional approvals or licenses may be required depending on the business sector (e.g., IRDA for insurance, FIPB for defense, etc.).
8. Filing with ROC: Application to be filed with the Registrar of Companies (ROC) within 30 days of establishing the business place in India, along with prescribed fees and documentation.

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Liaison Office (Representative Office)

A Liaison Office is primarily for exploring business opportunities and understanding the Indian market and investment climate. It acts as a communication channel between the parent foreign company and Indian entities but cannot undertake commercial activities. Its expenses must be funded solely by the parent company.

Key Points:

• Requires RBI approval under FEMA 1999
• Parent company must have a profit-making record for the last 3 financial years with a net worth exceeding USD 50,000
• An Authorized Dealer Category-I Bank applies to RBI on behalf of the foreign company
• Receives a unique identification number from RBI upon approval

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Project Office

A Project Office is set up when a foreign company enters an agreement with an Indian company to execute a specific project in India.

RBI approval is not required if:

• The project is funded directly by inward remittance from abroad
• Funded by bilateral or multilateral international financial institutions
• Authorized by appropriate Indian authorities
• Funded by an Indian company with a sanctioned term loan from an Indian bank or public financial institution

If these conditions are not met, prior RBI approval is necessary.

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Branch Office

A Branch Office allows a foreign company to conduct business activities in India on a larger scale, with prior approval from RBI.

Eligibility criteria:

• Engaged in manufacturing or trading activities
• Profit in the last 5 financial years
• Minimum net worth of USD 100,000 in the home country

Activities allowed for Branch Office:

• Import/export of goods
• Providing professional or consultancy services
• Research and development
• Promoting technical or financial collaboration between Indian and parent companies
• Acting as buying/selling agents for the parent company
• IT and software development services
• Technical support services for parent company products
• Operations by foreign airlines or shipping companies
• Foreign banks

Important Notes:

• Branch offices cannot manufacture but can subcontract manufacturing to Indian firms
• Allowed to repatriate profits after taxes as per RBI guidelines
• Branch offices have no ownership rights in India and are considered extensions of the foreign parent company

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Documents Required for Foreign Company Registration

A foreign company must file required documents within 30 days of establishing a place of business in India. The application is filed using Form FC-1 with the Registrar of Companies, accompanied by the prescribed fees.

S. No	Particulars
1	Business sector details to determine RBI approval requirements
2	Certified true copy of the company’s charter, statutes, or memorandum & articles (English)
3	Complete address of the registered/principal office of the company
4	List of directors and secretary with particulars
5	Name & address of Authorized Person(s) in India to accept legal notices
6	Full address of the Indian office deemed as the principal place of business
7	Details of opening/closing any place of business in India earlier
8	Declaration that none of the directors or authorized representatives have criminal records

Additionally, the application must be supported by an attested copy of the RBI approval under FEMA or other applicable laws.

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Summary

Setting up a foreign company in India requires compliance with legal and regulatory frameworks under the Companies Act, 2013, and RBI/FEMA guidelines. Choosing the appropriate mode of entry—whether Liaison Office, Project Office, Branch Office, or incorporating a subsidiary—depends on the nature of business activities planned in India.

For expert assistance in Foreign Company Registration in India, you can consult professionals who streamline the entire process from RBI approval to ROC filings.