How Foreigners Can Register a Company in India: A Step-by-Step Guide

India has emerged as one of the most desirable destinations for foreign entities, entrepreneurs, and even investors. The main reasons behind this scenario are its rapid economic growth, sufficient resources & workforce, the government’s push to the business ecosystem, and few other factors. These factors are driving more and more foreign entities and investors to head towards this growing economy. Due to this, the demand for foreign company registration in India for foreign entities has also shot up.

Foreign entities willing to begin their business in India to cater to customers’ demand may find registering a business complex, especially if they are not well-versed in India’s legal and regulatory environment. In this guide, we’ll help foreign entities begin or expand their business in India by business registration for foreigners with the most suitable business option.

Step 1: Choose the Right Business Structure

Selection of the best business structure is the first and foremost decision for foreign company registration India. Some available options for business registration for foreigners for include:

• Wholly Owned Subsidiary
  A wholly owned subsidiary is quite popular among foreigners. This structure gives a foreign company 100% ownership of a WOS and therefore, a complete operational control, decision-making authority, and also financial benefits. It is best fitted for foreign companies that wish to keep direct oversight and maintain their operations to ensure global standards. A WOS must comply with the Companies Act, Foreign Exchange Management Act (FEMA), and some other applicable tax obligations.

• Joint Venture
  Joint Venture is another desirable business structure for foreign corporation registration for the foreign entities looking to cater to the Indian consumer’s requirements. This structure enables a foreign company to join hands with one or more Indian companies to form a new business entity. The parties involved in the joint venture mutually agree to contribute to the capital, assets, and expertise and share management roles & responsibilities, profits and losses. This structure is most suitable for those looking to leverage local expertise and take calculated risks with limited control of the business. It gives structural flexibility as foreign entities can structure it; either as per equity-based or contractual agreements.
• Limited Liability Partnership (LLP)
  This structure is very demanding among foreign companies as it combines features of a partnership and a corporation thus offers flexibility and limited liability protection to its partners. It allows foreign companies to mark their presence in the Indian market with a reliable partner while availing corporate structure benefits. It offers limited liability protection, tax benefits, operational flexibility with ease of formation.
• Liaison Office
  It is a strategic business structure for foreign companies in India allowing them to make their minimum presence without starting full-fledged business operations. It basically acts as a communication point between the foreign parent company and its partners or customers. However, it has limited scope of activities with no revenue generation.
• Branch Office
  A Branch office is the most suitable option for foreign companies willing to engage in import or exports of goods, rendering professional/consultancy services, etc. This structure is allowed to earn revenue therefore it is deemed better than a liaison office.
  Evaluate your business goals, investment size, and sector restrictions under India’s Foreign Direct Investment (FDI) policies before deciding.

Step 2: Obtain a Digital Signature Certificate (DSC)

Every company registration in India requires authorized individuals to use a Digital Signature Certificate (DSC) to sign documents electronically.

• Apply for a DSC from a government-approved agency.
• Provide identity proof (passport) and address proof (utility bills or bank statements) for verification.

Step 3: Apply for a Director Identification Number (DIN)

The Director Identification Number (DIN) is mandatory for anyone who will serve as a director in the company.

• File Form DIR-3 online with the Ministry of Corporate Affairs (MCA).
• Attach proof of identity and address along with the applicant’s photograph.

Step 4: Reserve a Unique Company Name

Your company’s name should be unique and comply with the naming guidelines under the Companies Act 2013.

• Use the RUN (Reserve Unique Name) service on the MCA portal to propose names.
• The name must not be similar to any registered or existing trademarks.

Step 5: Draft Legal Documents

Arranging the legal documents is an integral part of a business/company registration in India. The following documents must be prepared before registering your business in India:

1. Memorandum of Association (MoA): This is a key company document that defines the company’s objectives and scope of operations.

2. Articles of Association (AoA): This crucial document outlines the rules and regulations governing the company.

3. Proof of the registered office address (rental agreement or ownership document).

4. No Objection Certificate (NOC) from the owner of the property in case the office premises are rented.

Step 6: Submit Incorporation Application

Once all documents are prepared, file the incorporation application using SPICe+ (Simplified Proforma for Incorporating a Company Electronically Plus) on the MCA portal. This form solely combines a number of steps to follow, such as:

• Applying for company registration.
• Acquiring PAN and TAN.
  All documents should be prepared accurately in the prescribed format if any, as erroneous documents attached with the application form can cause delay in process or even rejection.

Step 7: Pay Registration Fees and Stamp Duty

The government charges registration fees and stamp duty based on your company’s authorized capital and location. Payments can be made online via the MCA portal.

Step 8: Obtain Certificate of Incorporation (COI)

Once the application and the attached documents are reviewed successfully by the Registrar of Companies (ROC), it will issue a Certificate of Incorporation (COI).This document officially registers your company and includes your Corporate Identity Number (CIN).

Step 9: Open a Business Bank Account

After obtaining a COI, you can open a corporate bank account in India. Banks typically require:

• Certificate of Incorporation.
• PAN and TAN of the company.
• MoA and AoA.
• Proof of the registered office.

Step 10: Comply with Post-Incorporation Requirements

Post Registration, there are also some compliance requirements with the ongoing legal and regulatory obligations that need to be met. They are as follows:

• Go for GST Registration, if applicable.
• Maintain proper accounting records.
• Filing Annual Returns with the ROC timely.

Conclusion

For foreigners, choosing the right form of business and their registration can seem daunting, however seeking right guidance and assistance can make the process hassle-free. A professional compliance service provider company can help you navigate complexities of business registration for foreigners in India and reap the financial benefits of this promising and rapidly growing economy in the world.

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About Author: Set up your business in India with experts’ assistance quickly and ensure compliance with Setindiabiz. Setindiabiz is a foremost name in providing top-notch compliance and regulatory services to help domestic and foreign businesses establish and start their operations in India to reap the benefits of immense growth opportunities here. To streamline complex regulatory processes, Setindiabiz offers end-to-end expert support and guidance for foreign company registration in India, as well as post-compliance services, including licensing, taxation, and statutory compliance. The experienced company provides seamless service delivery to empower businesses to grow enormously in the evolving business landscape of India.