Establishing & Operating as a Foreign Company under Companies Act, 2013

Under the Indian Companies Act, 2013, a foreign company can establish its foothold and commence business operations in India through registration as a ‘foreign company.’  Here is a comprehensive explanation of the process, procedures, and compliance requirements:

Definition of Foreign Company: As defined in the Indian Companies Act, a foreign company is a business entity incorporated outside the borders of India, which has set up a place of business within the country. This presence could be direct or via an agent, either physically or through electronic mode, with the intent of carrying out business activities in India.

Place of Business: The prerequisite for a foreign company’s operation in India is establishing a place of business within the country. This place could take the form of a branch office, a liaison office, or a project office, depending on the company’s intended activities in India. A branch office can execute transactions and earn income, whereas a liaison office primarily acts as a channel of communication and cannot earn income. A project office is a temporary establishment set up to carry out a specific project in the country.

Application for Registration: The foreign company is required to submit an application for registration to the Registrar of Companies (RoC) in the prescribed Form FC-1. This application should include several documents such as:

• A certified copy of the charter, statute, memorandum, or articles of association of the foreign company. This provides the RoC with information about the company’s structure, purpose, and operational regulations.
• Full details of the directors and secretary of the foreign company. This serves to provide the RoC with information about the persons in control of the company’s affairs.
• Particulars of the principal place of business in India. This gives the RoC the exact location where the business will operate from within the country.
• Information of the authorized representative in India. This person will be the main point of contact between the RoC and the company.
• Consent to act as an authorized representative. This is an official declaration from the nominated representative that they are willing to take on the role.
• An undertaking to comply with the provisions of the Companies Act, 2013. This signifies the company’s commitment to abide by Indian law.
• Any other documents as required by the RoC.

Registration Certificate: Upon the RoC’s satisfaction with the provided documents and requirements, they may issue a Certificate of Registration to the foreign company. This certificate serves as official confirmation of the establishment of the foreign company’s presence in India.

Compliance Requirements: Once the foreign company is registered, it must fulfill certain compliance requirements, including:

• Filing annual financial statements that include a balance sheet, profit and loss account, and other related documents with the RoC. This helps to maintain transparency regarding the company’s financial position.
• Appointing an authorized representative in India for liaising with the Indian authorities.
• Adhering to Indian accounting and auditing standards. This ensures the company follows standardized financial reporting methods.
• Complying with tax laws and filing tax returns with the relevant tax authorities.
• Observing other applicable laws, regulations, and filings, depending on the nature of the business activities in India.

While the points above provide a broad outline, it’s crucial to remember that the specific requirements and procedures for registering and operating as a foreign company in India may change based on factors like the business’s nature, sector-specific regulations, and any bilateral agreements between India and the company’s country of origin.

To navigate the complex legal and regulatory landscape, foreign companies are advised to seek expert legal and professional guidance. This will ensure adherence to all requisite norms and regulations, guaranteeing a smooth registration process and efficient ongoing operations in India. The Indian Government has taken several measures to make India an attractive destination for foreign investors. However, proper compliance with local laws is critical to ensure a successful business operation in the country.