About Foreign Company
A Foreign Company, as defined by the Companies Act 2013, is an organization established outside India that conducts business within the country. This includes a wide range of activities. To register in India, these companies must comply with the Act’s provisions, and working with a reputable Indian company can help streamline the process.
There are several ways to establish a foreign company in India. These include registering as an Indian company under the 2013 Companies Act, setting up a fully owned subsidiary, or forming a collaborative partnership. Additionally, foreign companies can establish a liaison office, create a project office or representative office, or open a branch office. These options provide flexibility for foreign entities seeking to enter the Indian market.
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Establishing a Liaison Office
Known by another name Liaison Office or Representative Office these offices are mainly designed to help parent companies (those based outside of India) expand their business or to help them understand the investment and business climate of the countries in which they wish to do so. The Liaison Office in India can only use remittances from its parent foreign company for operations, not commercial activities. RBI sets requirements for opening a Liaison/Representative Office in India.
Professional assistance for registration
Eligibility
- The net worth must be greater than USD 50000 and there must have been a profitable track record in the three fiscal years prior in the home country.
- Should the subsidiary fail to meet the aforementioned requirement the parent company is required to submit an authorization that satisfies the aforementioned conditions.
- By FEMA 1999 and the Insurance Regulatory and Development Authority (IRDA) specific RBI approval is needed.
- An application for the establishment of an office must be sent to the RBI by a designated Authorized Dealer Category I Bank.
- The office is assigned a unique identification number by the RBI. Office for Projects. If a foreign company wants to open an office and has a project agreement with an Indian company to be carried out in India, the RBIs prior approval is not needed if:
- Directly funded by remittances received from overseas.
- Supported by a multilateral or bilateral international financial institution.
- If an Indian bank or other public financial institution has approved a term loan for the project then an Indian company or entity qualifies Additionally, if the foreign entity needs approval and the aforementioned requirements are not met, they must contact the RBI. An affiliate of the international corporation. With RBIs prior approval a foreign company may open a branch office and conduct business in India provided that:
- The business ought to be involved in trading or manufacturing.
- The five financial years’ worth of profit must have been made.
Features of Foreign Company:
Foreign businesses can operate fully and effectively in India through Branch Offices, which are permitted to conduct business in the same manner as their parent or group organizations. These offices can undertake a range of activities that align closely with the operations of their parent companies, allowing them to maintain consistency in their business practices and effectively engage in the Indian market.
- Goods import or export.
- Providing professional or advisory services in India.
- Carrying out or completing research projects that the relevant parent company is already working on.
- Encouraging financial or technical cooperation between Indian enterprises and parent or international group companies.
- Serving as the buying/selling agent in India and representing the parent company or foreign group companies.
- Providing their services in India for software development and information technology.
- Providing technical support for the products that the parent or international group companies supply.
- A foreign shipping company or airline.
- Banks abroad. Take note:
- The Branch Office can subcontract these kinds of services to any Indian manufacturer, but they are not allowed to engage in manufacturing activities themselves.
- Branch offices are permitted to repatriate their branch's profits net of applicable tax rates and by Reserve Bank of India regulations.
- Since a branch office is merely an extension of an outgoing company in another nation ownership information is not provided.
Documents Needed
When establishing a Liaison Office or Branch Office in India, certain documents must be filed within 30 days of the office’s establishment. These include
- The Business Sector of the Company to determine whether or not RBI Approval is necessary.
- Certified True Copy of the charter statutes or memorandum and articles of the company and if the instrument is not in the English language a certified translation thereof.
- Full address of the company’s principal office or registered office.
- a list with the following details that includes the directors and secretary of the business.
- Name and address of the Authorized Person(s) in India who are permitted to accept the process serving on the company’s behalf as well as any notices or other documents that must be served to the company.
- Complete address of the company’s office in India which is considered to be its main location of business there.
- Details about the opening and closing of a business location in India on one or more prior occasions.
- The affirmation that neither the company’s directors nor the Authorized Representative in India have ever been found guilty or prohibited from forming businesses or managing organizations in India or overseas.
- Banks abroad. Take note:
- The Branch Office can subcontract these kinds of services to any Indian manufacturer, but they are not allowed to engage in manufacturing activities themselves.
- Branch offices are permitted to repatriate their branch's profits net of applicable tax rates and by Reserve Bank of India regulations.
- Since a branch office is merely an extension of an outgoing company in another nation ownership information is not provided.
After the establishment of a place of conduct in India, a foreign company has 30 days to apply with the registrar using Form FC-1 the required documents for the registration by a foreign company under Section 380 (sub-section 1) and an application fee as specified in the Companies (Registration Offices and Fees) Rules 2014. The application must be supported by an attested copy confirming the Reserve Bank of India’s (RBI) approval by the Foreign Exchange Management Act or other applicable laws it should be stressed.
FAQ's
It refers to granting permission for a business from one nation to conduct business in another.
Select a corporate structure register the name designate regional representatives file paperwork pay fees and secure required licenses.
The financial statements identity documents board resolution articles of incorporation and certificate of incorporation are frequently required.
Minimum capital needs opening a local bank account paying registration costs and filing taxes.
Tax compliance corporate governance compliance license renewals annual filings and reporting modifications.