Indian economy has a major impact on global market and trading. This is why India has become one of the world’s fastest growing economies that is attracting abundance of foreign investment in different ways. Many foreign nationals and foreign companies are investing and starting businesses in India in the form of private limited company. They have various queries while registering a private limited company in India like what documents are required etc.
In this blog, we will provide you comprehensive guide for foreign nationals and foreign companies registering a private limited company in India.
Table of Contents
Is a foreign national allowed to become a director of Pvt. Ltd. Company in India and how?
Yes, a foreign national is always allowed to become a director of Private Limited Company in India subject to satisfaction of other conditions prescribed.
As per the Companies Act, 2013, a private limited company is required to have at least 2 directors and can have maximum up-to 15 directors in India. Moreover, at least one director shall be a citizen and resident of India in the Board of Directors of Private limited company and other directors can be either Indian citizen and resident or NRI or foreign national.
Can a foreign national become a shareholder of Private Limited Company in India?
Yes, a foreign national is allowed to become a shareholder of Private limited company in India.
A private limited company in India must have minimum 2 and maximum 200 shareholders and Out of all the shareholders of the company, atleast one shareholder shall be a citizen and resident of India and other shareholders can be of foreign national or foreign or Indian body Corporate.
What documents are required from a foreign national for becoming a director/shareholder in private limited company in India?
- Passport size photograph
- Identity Proof – Passport/ National Id issued by government
- Address Proof – Bank Statement/ Utility Bill
What documents are required to be Apostilled by a foreign national for becoming director/shareholder in private limited company in India?
- Identity proof of foreign national
- Address proof of foreign national
- Subscriber Sheet of MoA
- Subscriber sheet of AoA
- PAN Undertaking
*Notarized/Apostilled documents are not required in following cases
- That the foreign national signs the documents in India with business visa, or
- That the foreign national has either OCI (Overseas citizen of India) or PIO (Person of Indian Origin) card at the time of company’s registration.
Whether a foreign national need to be present physically in India for registering a private limited company?
No, the Ministry of Corporate Affairs (MCA) has made the entire process of private limited company registration online which makes it easy for foreign nationals to start a company in India without being physically present in India. Thus, the foreign national is not required to come to India for private Limited company’s registration and he/she can just send the copy of all the required documents via different online and offline modes such as E-mail, courier etc.Moreover, all the company registration documents are required to be digitally signed, thus foreign nationals need to be present in India for signing any document.
Is a foreign national director mandatorily required to be physically present in Board meetings?
No, foreign directors need not to be physically present in Board meetings.
A private limited company is required to hold minimum 4 Board meetings in a financial year. However, a foreign director is not required to be physically present in meeting as he can also attend the meeting through video conferencing.
Can registered office of the company be situated at a place outside India?
No, a private limited company in India must have a registered office in India only even if it’s members are foreign nationals.
Can a foreign company register a private limited company in India?
No, a foreign company cannot register a private limited company in India. However, a foreign company can become one of the shareholders of the private limited company.
The key point to note here is that any natural person and a body corporate can become the shareholder of the Private Limited Company but a director can only be a natural person.
It means that shareholder can be both individual and body corporate but a director must be a natural person only.
Consequently, a foreign company can become a shareholder of private limited company but cannot register a private limited company and thus it needs a natural person as director to register a private limited company.
Apart from this, there are many other ways by which a foreign company can start its business in India like wholly owned subsidiary company of foreign company or liaison office or project office or branch office and so on.
Whether there is any RBI compliance required to be observed in case of foreign investment in private limited?
Yes, the Indian Government has prescribed various RBI compliances for foreign investments in India. Following sectors mandatorily require RBI approval in case of investments by foreign nationals and/or foreign companies –
- Petroleum sector (except for private sector oil refining), Natural gas / LNG pipelines.
- When Invest is made in infrastructure companies
- Defence and strategic industries
- Atomic minerals
- Print Media & Broadcasting
- Any Postal Services
- Any Courier Services
- Establishment and operation of Satellite
- Development of Integrated Township
- Tea Sector
- Asset Reconstruction Companies
However, there are several cases when RBI approval is not required as 100% FDI is permissible through Automatic Route without RBI approval.
Now, the process of Private limited registration has become easy and foreign nationals and foreign body corporate can also easily start a business in India in the form of different business structures like private limited company. If you are a foreign national and/or foreign company and are looking forward to register a private limited company then contact your Trustworthy Advisors Manthan Experts just by calling at +9643969969.