 Incorporation of Business Entity
Incorporation of a CompanySetting up Liaison /Representative /Branch/Project Office
A foreign company planning to set up business operations in
India has the following options to set up a business entity:-
1 As an incorporated entity under the Companies Act 1956 through
JVs or wholly owned subsidiaries
2 As an unincorporated entity through liaison
office/representative office or project office or branch office
of a foreign company. Such offices can undertake activities
permitted under the Foreign Exchange Management (establishment
in India of branch office of other place of business)
Regulations 2000.
Incorporation of a Company
Incorporation of a company in India is governed by the Companies
Act 1956. A company could be a private limited company or a
public limited company.
A private limited company is one that through its Articles
restricts the rights to transfer its shares, limits the number
of its members to 50, prohibits any invitation to the public to
subscribe for any shares in the company and prohibits any
invitation or acceptance of deposits from other than its
members.
A public company is a company, which is not a private company.
For registration and incorporation of a company, an application
has been filed with Registrar of companies. Application for
registration of a company accompanied by the selected names,
memorandum of association and articles of association and other
necessary documents is to be filed with the Registrar of
companies of the State in which the company is proposed to
incorporated. The documents required to be filed along with
applications are as follows: -
A. Memorandum of Association
B. Articles of Association
C. The agreement, if any, which the company proposes to enter
into with any individual for appointments as its managing or
whole time director or manager
D. A copy of the letter of the Registrar of Companies intimating
the availability of the proper time
E. Documents evidencing payment of prescribed registration and
filling fee
F. Documents evidencing the directorship and situation of
Registered Office inform 32 and Form 18 respectively and
declaration of compliance with the requirements of Companies Act
for giving consent to act as a director.
Upon compliance with all requirements, the Registrar will
register the company and issue a certificate of incorporation of
company that would bring the company into existence as a legal
entity. Once the company has been duly registered and
incorporated as an Indian company, it is subject to Indian laws
and regulations as applicable to other domestic Indian
companies.
For further details please visit the website of Ministry of
Company Affairs http://www.mca.gov.in/
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Setting up Liaison /Representative /Branch/Project Office
Liaison Office/Representative Office
A Liaison Office could be established with the approval of
Reserve Bank of India. The role of Liaison Office is limited to
collection of information, promotion of exports/imports and
facilitate technical/financial collaborations.
Liaison office cannot undertake any commercial activity directly
or indirectly.
Project Office
Foreign companies planning to execute specific projects in India
can set up a temporary project/site offices in India for
carrying out activities only relating to that project. RBI has
now granted general permission to foreign entities to establish
project offices subject to specified conditions.
Branch Office
Foreign companies engaged in manufacturing and trading
activities abroad are allowed to set up branch offices in India
for the purposes of export/import of goods, rendering
professional or consultancies services, R&D, promoting technical
or financial collaborations, representing the parent company,
acting as buying/selling agents, rendering services in IT and
development of software, rendering technical support to the
products supplied by the parent/group companies, foreign
airline/shipping companies. Branch offices could be established
with the approval of RBI and may remit outside India profit of
the branch, subject to RBI guidelines after payment of
applicable Indian taxes.
Procedure for establishing Liaison Office/Project Office/Branch
Office
Application for setting up these offices may be submitted to
Chief General Manger, Exchange Control Department (Foreign
Investment Division), RBI, Central Office, Mumbai in Form FNC-I.
Website of Foreign Exchange management Department, RBI
http://www.rbi.org.in/scripts/Fema.aspx
Foreign Exchange Management (Establishment in India of branch or
office or other place of business) Regulations, 2000
http://www.rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=176
Foreign Exchange Management (Establishment in India of branch or
office or other place of business) (Amendment) Regulations, 2003
http://www.rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=1416
Foreign Exchange Management (Establishment in India of branch or
office or other place of business) (Second Amendment)
Regulations, 2003
http://www.rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=1450
Foreign Exchange Management (Establishment in India of Branch or
Office or Other Place of Business) (Amendment) Regulations, 2005
http://www.rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=2469
Form FNC-I for opening a Branch/Project/Liaison Office
http://rbidocs.rbi.org.in/rdocs/Forms/PDFs/form-fnc1.pdf
Exchange Control manual of RBI
http://www.rbi.org.in/scripts/BS_ECMCategory.aspx
Foreign Exchange Management Act 1999
http://indiacode.nic.in/fullact1.asp?tfnm=199942
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