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The most suitable form of entity for carrying out business in India with a long term objective would be to form a Private Limited Company, by making investment through the equity shares in the Company. The basic Requirement for a private Limited Company in India is as follows :-

• Minimum Two Directors of The company
• Minimum Two Shareholders of the Company
• Minimum Capital of the Company should be INR 100000/-

The formation of the above Entity in India takes Approximate 12-15 Days after receipt of all the necessary Documents, The breakup of the Number of days is as follows :-

Activity	Days
Taking Directors Identification Number (DIN)	1 Day
Taking Digital Signature of Directors	1 Day
Reservation of the name of the Company	5 Days
Preparation of other Document such as MOA,AOA, Forms etc	2 Days
Filling of Documents with Authorities	1 Days
Liaison with the authorities and Correction	3 Days
Getting Final Certificate of Incorporation	2 Days
Total Number of Days	15 Day

The Cost of formation of Private limited depends on the Authorised Capital of the Company, Following is the breakup of Cost for the formation of the Company with a Minimum required authorised Capital of INR 1 Lac.

Activity	Days
Taking Directors Identification Number (DIN)	INR 1500/- Each Director *2
Taking Digital Signature of Directors	INR 1500/- Each Director *2
Reservation of the name of the Company	INR 1000/-
Filling fees of government for final documents*	INR 6200/-
Other Government Expenses	INR 3000/-
Total Cost	INR 23200/-

As per the Basic requirement for the Company formation we need minimum 2 Shareholders and 2 Directors Hence we need minimum two shareholders and directors. In order to fulfill your requirement we can form Company by giving just one share to the second shareholders. The second shareholder will hold the shares on behalf of the Company itself hence the ownership will be 100% with the Company. In respect of the directorship we need minimum two individual name to be acting as directors of the Company.

No the directors need not be present to perform the formation of the Company, They can provide the documents through the courier to our office and we can take care of the things. Further there are certain documents which are required to Notarised or Certified by the Indian embassy in your country.

 

Partner

Atleast 2 persons (natural or artificial) are required to form a LLP. In case any Body Corporate is a partner, than he will be required to nominate any person (natural) as its nominee for the purpose of the LLP.

Following can become a partner in the LLP

1. Company incorporated in and outside India
2. LLP incorporated in & outside India
3. Individuals resident in & outside India

Contribution

In case of LLP, there is no concept of any share capital but every partner is required to contribute towards the LLP in some manner. The said contribution can be tangible, movable or immovable or intangible property or other benefit to the limited liability partnership, including money, promissory notes, and other agreements to contribute cash or property, and contracts for services performed or to be performed.

In case the contribution is in intangible form , the value of the same shall be certified by a practicing Chartered Accountant or by a practicing Cost Accountant or by approved valuer from the panel maintained by the Central Government.The monetary value of contribution of each partner shall be accounted for and disclosed in the accounts of the limited liability partnership in the manner as may be prescribed.

The LLP Agreement must specify the contribution intended to be paid by all the members and the form in which it will be paid.

Designated Partners

‘Designated Partner’ means a partner who is designated as such in the incorporation documents or who become a designated partner by and in accordance with the Limited Liability Partnership Agreement.

Every limited liability partnership shall have at least two designated partners who are individuals and at least one of them shall be a resident in India

Provided that in case of a limited liability partnership in which all the partners are bodies corporate or in which one or more partners are individuals and bodies corporate, at least two individuals who are partners of such limited liability partner¬ship or nominees of such bodies corporate shall act as designated partners.

Designated Partner shall be :

1. Responsible for the doing of all acts, matters and things as are required to be done by the limited liability part¬nership in respect of compliance of the provisions of this Act including filing of any document, return, statement and the like report pursuant to the provisions of this Act and as may be specified in the limited liability partnership agreement;
2. Liable to all penalties imposed on the limited liabili¬ty partnership for any contravention of those provisions.

Explanation.—for the purposes of this section, the term “resi¬dent in India” means a person who has stayed in India for a period of not less than one hundred and eighty-two days during the immediately preceding one year.

Director Identification Number

Every Designated Partner is required to obtain a DIN from the Central Government. If a person already has a DIN, the same can be used for forming LLP.

The Direction Identification Number would be used as Unique Identification for the Designated Partner also.

The DIN can be applied online at (http://www.mca.gov.in/MCA21/Din.html).

Digital Signature Certificate

All the forms like eForm 1, eForm 2, eForm 3 etc which are required for the purpose of incorporating the LLP are filed electronically through the medium of Internet. Since all these forms are required to be signed by the partner of the proposed LLP and as all these forms are to be filed electronically, it is not possible to sign them manually. Therefore, for the purpose of signing these forms, all the Designated Partner of the proposed LLP needs to have a Digital Signature Certificate (DSC).

The Digital Signature Certificate once obtained will be useful in filing various forms which are required to be filed during the course of existence of the LLP with the Registrar of LLP.

LLP Name

Selection of the name for the proposed LLP to be incorporated is one of the important process of the entire incorporation process, ideally the name of the LLP should be such which represents the business or activity intended to be carried on by the LLP. Before selecting the name of the LLP, it is necessary to evaluate the proposed name under the following given criteria:

LLP Agreement

For the purpose of forming a LLP, there should be agreement between the partners interested in forming the LLP to be known as LLP Agreement. The said Agreement forms the basis of the formation of LLP and lays down its founding structure. The LLP agreement is an agreement between the Partners and between the LLP & its partners.

The basic contents of Agreement are:

• Name of LLP
• Name of Partners & Designated Partners
• Form of contribution
• Profit Sharing ratio
• Rights & Duties of Partners

BRANCH office is suitable for a foreign company who wants to research and understand the Indian markets.

The foreign company can have any revenue from the Indian Branch office, but only from the activity allowed by the Reserve Bank of India. It has to meet all its expenses of Indian office through remittances from the Head office or through the revenue generated from the Indian operation permitted by the Reserve Bank of India.

It is suitable for foreign Companies looking to setup a temporary office in India and not planning to have long term plans for the Indian operations.

GENERAL FEATURES OF BRANCH OFFICE

• The name of Indian Branch office shall be same as parent company.
• The governing body for the Branch office License is Reserve Bank of India.
• The Branch office does not have any ownership; it is just an extension of the existing company in the foreign country.

ACTIVITIES ALLOWED TO BRANCH OFFICE IN INDIA

• Export/Import of goods.
• Rendering Professional or Consultancy services.
• Carrying out research work, in which the parent company is engaged.
• Promoting technical or financial collaborations between Indian companies and Parent or Overseas Group Company.
• Representing the Parent Company in India and acting as buying/selling agent in India.
• Rendering services in Information Technology and development of software in India.
• Rendering technical support to the products supplied by parent/group companies.
• Foreign Airline/Shipping Company.

CONDITION FOR SETTING UP BRANCH OFFICE

• The Company looking to start a Branch office in India should have a profitable track record during immediately preceding five years in the home country.
• The Net Worth of the Company i.e. Total of paid-up capital and free reserves, less the intangible assets as per the latest Audited Balance Sheet or Account Statement certified by a Certified Public Accountant or any Registered Accounts Practitioner] shall be not less than or equal to USD 1,00,000/-

REGISTRATION OF BRANCH OFFICE

• The application for Branch office License is approved by the RBI, but as per the latest circular the application for Branch office is routed through the Authorized Dealers (AD). The authorized dealer means the various institutions having banking licenses in India.
• It is always preferable for the Company to opt for the same authorized dealer as it is dealing in the home country.
• Due to this the timeline for setting up the Branch office has increased tremendously. Further the documentation required for the same has also increased to a great extent.

BRIEF SUMMARY OF STEPS TO GET RBI LICENSE

• Selection of Authorized Dealer (AD) by the company, where the company will maintain its bank account in India.
• Preparing documentation as required by the Authorized Dealer for Branch office.
• Submission of documents to the AD.
• Scrutiny of documents by the AD.
• Providing clarification and additional documents to AD.
• Submission of final application to RBI by the AD.
• Follow up and getting the Licenses from AD.

DOCUMENTS REQUIRED FOR BRANCH OFFICE SETUP

• Form FNC1 – Three copies*
• Letter from the Principal Officer of the Parent company to RBI. *
• Letter of authority from the Parent Company in favor of Local Representative of the Company in India.
• Letter of authority/ Resolution from Parent company for setting up Branch office in India.
• Comfort letter from the Parent Company intending to support the operation in India.
• Two copies of the English version of the Certificate of Incorporation, Memorandum & Articles of association (Charter Document) of the Parent Company duly translated & attested by the Indian embassy or notary public in the country of registration.
• The latest audited Balance sheet and annual accounts of parent company duly translated, Certified by Indian Consulate & Directors & notarized by the local notary for past three years.
• Name, address, email ID and telephone number of the authorized person in Home Country.
• Details of Bankers to the Foreign Company in the Country of Origin along with the bank account number.
• Commitment from the Foreign Company to the effect that it will be open to report / opinion sought from its bankers by the Government of India / Reserve Bank of India
• Expected funding for operations in India.
• Details relating to address of the proposed local office, number of persons likely to be employed, number of foreigners among such employees and address of the head of the Local office, if decided
• Details of activity carried out and product and services in Home Country by the applicant Foreign Company in brief.
• Bankers Certificate
• Latest Proof of identity of all the Directors – Certified by Consulate and Banker in Home Country
• Latest Proof of address all of Directors – Certified by Consulate and Banker in Home Country
• Details of the Individuals / Company holding more 10% of equity in the foreign company
• Structure of the foreign company (w.r.t Shareholding pattern)
• Complete KYC of Shareholders holding more than 10% Equity in the Applicant Company
• Resolution for Opening up Bank Account with the AD in India.
• Duly Signed Bank Account Opening Form for Indian Bank.

PROCEDURE AFTER GETTING THE RBI LICENSE

Every Branch office once registered with RBI shall get itself registered with the Ministry of Corporate Affairs (MCA). The Foreign Company has to acquire a registration no. (CIN-Corporate Identity Number) from Registrar of Companies.

DOCUMENTS TO BE PREPARED AND FILED WITH ROC

• Filing of Form 44 to register with Roc and attachment of the required documents
• Charter, Statutes or Memorandum and Articles of Association or other Instrument constituting or defining the Constitution of the Company (as provided under Rule 16, 17 of the Companies (Central Government’s) General Rules and Forms, 1956).

If the above documents are not in English then the translated version of the documents.

• Director(s) details – individuals
• Director(s) details – bodies corporate
• Reserve bank of India approval letter
• Secretary(s) details
• Power of attorney or board resolution in favor of the Authorized Representative(s)

OTHER BUSINESS LICENSES APPLICABLE TO BRANCH OFFICE

• Permanent account number – pan number
• Tax deduction number – tan number
• Shop & establishment license from Local Municipal body
• Service Tax Registration – if the Branch provides any services in India
• VAT & CST Registration – If the Branch carries out trading activities in India

ANNUAL ACTIVITY TO BE CARRIED OUT BY BRANCH OFFICE

• Maintenance of Books of Account
• Getting Annual Accounts audited
• Filling of Annual Activity Certificate with RBI
• Filling of Annual Return and Balance sheet with Registrar of Companies
• Intimating any change in constitution of Foreign Company to RBI & ROC
• Intimating any change in Directors of Foreign Company to RBI & ROC
• Intimating each and every change in the BRANCH office to RBI & ROC
• No additional place of business can be started unless approval is taken from RBI.

CLOSURE OF BRANCH OFFICE

Generally the Branch office licenses is given for three years, if at any time the Company plans to close the Branch office setup in India it shall file the necessary documents with the Authorized Dealer, and the application for the closure shall be forwarded by the Authorized Dealer.

• Copy of the Reserve Bank’s permission/ approval from the Sectoral Regulator(s) for establishing the BO / LO.
• Auditor Certificate
  1. indicating the manner in which the remittable amount has been arrived at and supported by a Statement of Assets and Liabilities of the applicant, and indicating the manner of disposal of assets
  2. confirming that all liabilities in India including arrears of gratuity and other benefits to employees, etc., of the Branch office have been either fully met or adequately provided for
  3. confirming that no income accruing from sources outside India (including proceeds of exports) has remained un-repatriated to India.
• No-objection/Tax Clearance Certificate from Income-Tax authority for the remittances.
• Confirmation from the applicant/parent company that no legal proceedings in any Court in India are pending and there is no legal impediment to the remittance.
• A report from the Registrar of Companies regarding compliance with the provisions of the Companies Act, 1956, in case of winding up of the Office in India.
• Any other document, specified by the Reserve Bank while granting approval for closure.

LIAISON Office means a place of business to act as a channel of communication between the Principal Foreign Company and entities in India; but which does not undertake any commercial, trading or any kind of industrial activity, directly or indirectly.

Liaison office is suitable for a foreign company who wants to conduct Research & Development activity or to understand the Indian market or the problem of existing clients of the company and serve them better.

The company cannot have any revenue from the Indian Liaison office; it has to meet all its expenses of Indian office through remittances from the Head office through normal banking channel. The Liaison office is not allowed to earn any income in the India.

 

GENERAL FEATURES OF LIAISON OFFICE

• The name of Indian Liaison office shall be same as parent company.
• The governing body for the Liaison office License is Reserve Bank of India.
• The Liaison office does not have any ownership; it is just an extension of the existing company in the Foreign Country.
• All the expenses of the Liaison office are met by the Parent Company; hence the funds shall be received from head office account only.
• The License for the Liaison office is given for three years and shall be renewed every 3 years.

ACTIVITIES ALLOWED TO LIASION OFFICE IN INDIA

• Representing the parent company / group companies in India.
• Promoting Export Import in India of the Parent Company.
• Promoting Technical/Financial collaborations between Parent/Group companies and companies in India.
• Acting as a communication channel between the Parent Company and Indian Companies.

CONDITION FOR SETTING UP LIAISON OFFICE

• The Company looking to start a Liaison office in India should have a profitable track record during immediately preceding three years in the home country.
• The Net Worth of the Company i.e. Total of paid-up capital and free reserves, less the intangible assets as per the latest Audited Balance Sheet or Account Statement certified by a Certified Public Accountant or any Registered Accounts Practitioner] shall be not less than or equal to USD 50,000/-

REGISTRATION OF LIAISON OFFICE

• The application for Liaison office License is approved by the RBI, but as per the latest circular the application for Liaison office is routed through the Authorized Dealers (AD). The authorized dealer means the various institutions having banking licenses in India.
• It is always preferable for the Company to opt for the same authorized dealer as it is dealing in the home country.
• Due to this the timeline for setting up the Liaison office has increased tremendously. Further the documentation required for the same has also increased to a great extent.

BRIEF SUMMARY OF STEPS TO GET RBI LICENSE

• Selection of Authorized Dealer (AD) by the company, where the company will maintain its bank account in India.
• Preparing documentation as required by the Authorized Dealer for Liaison office.
• Submission of documents to the AD.
• Scrutiny of documents by the AD.
• Providing clarification and additional documents to AD.
• Submission of final application to RBI by the AD.
• Follow up and getting the Licenses from AD.

DOCUMENTS REQUIRED FOR LIAISON OFFICE SETUP

• Form FNC1 – Three copies*
• Letter from the Principal Officer of the Parent company to RBI. *
• Letter of authority from the Parent Company in favor of Local Representative of the Company in India.
• Letter of authority/ Resolution from Parent company for setting up Liaison office in India.
• Comfort letter from the Parent Company intending to support the operation in India.
• Two copies of the English version of the Certificate of Incorporation, Memorandum & Articles of association (Charter Document) of the Parent Company duly translated & attested by the Indian embassy or notary public in the country of registration.
• The latest audited Balance sheet and annual accounts of parent company duly translated, Certified by Indian Consulate & Directors & notarized by the local notary for past three years.
• Name, address, email ID and telephone number of the authorized person in Home Country.
• Details of Bankers to the Foreign Company in the Country of Origin along with the bank account number.
• Commitment from the Foreign Company to the effect that it will be open to report / opinion sought from its bankers by the Government of India / Reserve Bank of India
• Expected funding for operations in India.
• Details relating to address of the proposed local office, number of persons likely to be employed, number of foreigners among such employees and address of the head of the Local office, if decided
• Details of activity carried out and product and services in Home Country by the applicant Foreign Company in brief.
• Bankers Certificate
• Latest Proof of identity of all the Directors – Certified by Consulate and Banker in Home Country
• Latest Proof of address all of Directors – Certified by Consulate and Banker in Home Country
• Details of the Individuals / Company holding more 10% of equity in the foreign company
• Structure of the foreign company (w.r.t Shareholding pattern)
• Complete KYC of Shareholders holding more than 10% Equity in the Applicant Company
• Resolution for Opening up Bank Account with the AD in India.
• Duly Signed Bank Account Opening Form for Indian Bank.

PROCEDURE AFTER GETTING THE RBI LICENSE

Every Liaison office once registered with RBI shall get itself registered with the Ministry of Corporate Affairs (MCA). The Foreign Company has to acquire a registration no. (CIN-Corporate Identity Number) from Registrar of Companies

DOCUMENTS TO BE PREPARED AND FILED WITH ROC

• Filing of Form 44 to register with Roc and attachment of the required documents
• Charter, Statutes or Memorandum and Articles of Association or other Instrument constituting or defining the Constitution of the Company (as provided under Rule 16, 17 of the Companies (Central Government’s) General Rules and Forms, 1956).

If the above documents are not in English then the translated version of the documents.

• Director(s) details – individuals
• Director(s) details – bodies corporate
• Reserve bank of India approval letter
• Secretary(s) details
• Power of attorney or board resolution in favor of the Authorized Representative(s)

OTHER BUSINESS LICENSES APPLICABLE TO LIAISON OFFICE

• Permanent account number – pan number
• Tax deduction number – tan number
• Shop & establishment license from Local Municipal body

ANNUAL ACTIVITY TO BE CARRIED OUT BY LIAISON OFFICE

• Maintenance of Books of Account
• Getting Annual Accounts audited
• Filling of Annual Activity Certificate with RBI
• Filling of Annual Return and Balance sheet with Registrar of Companies
• Intimating any change in constitution of Foreign Company to RBI & ROC
• Intimating any change in Directors of Foreign Company to RBI & ROC
• Intimating each and every change in the LIAISON office to RBI & ROC
• No additional place of business can be started unless approval is taken from RBI.

CLOSURE OF LIAISON OFFICE

Generally the Liaison office licenses is given for three years, if at any time the Company plans to close the Liaison office setup in India it shall file the necessary documents with the Authorized Dealer, and the application for the closure shall be forwarded by the Authorized Dealer.

• Copy of the Reserve Bank’s permission/ approval from the Sectoral Regulator(s) for establishing the BO / LO.
• Auditor Certificate
  1. indicating the manner in which the remittable amount has been arrived at and supported by a Statement of Assets and Liabilities of the applicant, and indicating the manner of disposal of assets
  2. confirming that all liabilities in India including arrears of gratuity and other benefits to employees, etc., of the Liaison office have been either fully met or adequately provided for
  3. confirming that no income accruing from sources outside India (including proceeds of exports) has remained un-repatriated to India.
• No-objection/Tax Clearance Certificate from Income-Tax authority for the remittances.
• Confirmation from the applicant/parent company that no legal proceedings in any Court in India are pending and there is no legal impediment to the remittance.
• A report from the Registrar of Companies regarding compliance with the provisions of the Companies Act, 1956, in case of winding up of the Office in India.
• Any other document, specified by the Reserve Bank while granting approval for closure.