Foreign Company In India has emerged as a new corporate concept for foreign persons willing to invest in India through Foreign Company Registration in India. Foreign Companies are coming and doing business in India. Conclusively, we can say that Foreign Companies boost the economy of both the states i.e the parent state and India.
What is Foreign Company?
Next, The most frequently asked question in the case of foreign company registration in India is what is Foreign Company. In simple terms, the foreign company is basically a company or a body corporate which is incorporated outside India and it has a place of business in India and operates certain business activities in India. in addition to this, Example of foreign companies can be search online easily.
Definition of Foreign Company
The subsequent point to learn is the definition of a Foreign Company, and it is defined under Section 2(42) of the Companies Act, 2013.
A foreign company is any company or body corporate incorporated outside India which,
- has a place of business in India whether by itself or through an agent, physically or through electronic mode; and
- conducts any business activity in India in any other manner.
What are the benefits of establishing Foreign Companies in India?
- It enhances the Economy of India.
- Foreign Companies can use the abundant resources of India.
- It enhances the Employment Rate of India by generating employment opportunities for Indian People.
- Foreign Companies can avail the benefits given to the Foreign Companies by Indian Government through various Schemes and Policies.
- It improves the Export Rate of India.
- It develops the Human Resource by giving training and skills to the Indian Labor and employees.
How a Foreign Company can run business in India?
Accordingly, Any company incorporated outside India (i.e. Foreign Company) is willing to do business in India can run business in India through following modes –
1. As Indian Company
2. As Foreign Company
As Indian Company
Indian Company is a company incorporated in India and any foreign company can run the Indian Company through investment. There are following ways to run an Indian company by Foreign Company –
100% FDI by Foreign Company
A Foreign Company can wholly own an Indian Company by investing 100% of the shares by way of Foreign Direct Investment. In this case, an Indian Company becomes the subsidiary company of the Foreign Company.
Joint Venture is a form of business whereby two or more companies enter into a partnership to work together or to form a new Company to achieve a commercial objective. Thus, a foreign company can enter into a Joint Venture with an Indian Company. In case of joint venture between Indian Company and Foreign Company to sign a Memorandum of Understanding or a letter of Intent which shall manifest the basis or the object of the Joint Venture. Moreover, the MOU must state all the terms and conditions of the Joint Venture business and it must be in accordance with the state and international Laws. It is generally preferred when the 100% FDI is not allowed.
After Joint Venture, the next option is to establish a Subsidiary of a foreign company. Meaningly, A Foreign Company can become a subsidiary company of Indian Company by holding the maximum of 49.99% of the total shares of an Indian Company.
As Foreign Company
In this method, Foreign Company gets itself registered under the Companies Act, 2013 by establishing the Branch Office or Project Office or Liaison Office in India. Since these are not the full-fledged subsidiary companies therefore they can perform limited functions.
Foreign Company establishes a Branch office of its company in India to expand the business. Branch Office can only conduct the branch activities. Thus, it is not a separate entity. Its primary role is to capture the Indian Market by escalating the number of prospective customers in India.
Branch Offices are permitted to do following activities in India –
- Export or Import of Goods
- Professional Services or Consultancy Services
- Research work
- Shipping Business or Foreign Airline
- Promotion of Technical or Financial collaborations of Foreign Companies with Indian Companies
- Represent the Parent Foreign Company in India by taking the role of agent in India
- Information Technology Services and Software Development in India
- Technical Support of the Products supplied by the Foreign Company
A Foreign Company can start its foreign business through different foreign company structures, one of them is to also establish a Liaison office in India under the Foreign exchange Management Act, 1999. With the Liaison Office, Foreign Company can only conduct liaison activities of the company. This office has very limited role as the main role of the Liaison Office is to act as a catalyst in the form of channel of communication between the head office of the foreign company and the Liaison Office in India. This is why it is also called as Representative Office.
As the name suggests, foreign companies establish a Project Office in India to complete the Projects given by any Indian Company to the Foreign Company and its establishment is subjected to the permission of RBI. These are temporary in nature which are established to execute a particular project
What statutes govern the Foreign Company in India?
Majorly following laws regulate and govern the Foreign Company in India –
- The Companies Act, 2013
- Foreign Direct Investment Policy
- Foreign Exchange Management Act, 1999 (FEMA)
What are the documents required for Foreign Company Registration in India?
- Firstly, Address Proof of the Registered Office
- Secondly, PAN Card (in case of Indian Citizen) / Passport (in case of Foreign National)
- Next, Address Proof of the applicant
- Then, Identity proof (Aadhar Card for Indian and Government License for foreign national)
- Thereafter, Transfer of shares
- Above all, Joint Venture Contract (If applicable)
- Subsequently, Holding shares details
- In addition to above all, Non-Compete from Board of Directors
- Then, the Memorandum of Association
- Next is the Article of Association
- Then, the Incorporation Certificate
- Next is Complete details of Directors, shareholders of the applicant company
- Thereafter, Audited Financial statements (of immediately preceding 5 years)
- Moreover, Banker’s Report of the applicant is also required
- Second last is 5 passport size photographs and 5 copies of the passport from the authorized signatory
- lastly, Address proof of the Authorized signatory (If applicable)
**In case of Foreign Nationals, all the documents must be duly certified by the Indian Consular or Consulate.
Which forms are required to be filed by Foreign Companies with MCA?
The next point to learn about the foreign company registration in India is which MCA forms are applicable to Foreign Companies..
|eForm FC-1||details of the principal place of business||within 30 days from the date of establishment of place of business in India|
|eForm FC-2||alterations in the statute or charter of the Company||Within 30 days from the date of alteration|
|eForm FC-3||Financial statements||within 6 months from the closing of financial year|
|eForm FC-4||Annual Return||within 60 days from closing of financial year|
In conclusion, Online Company Registration in India including foreign company registration in India is indeed a tough task and thus, requires professionals for foreign company registration easily. Additionally, Registering a Foreign Company in India is a tough task as it involves various important factors and aspects which are to be kept in mind while completing the registration and starting the business. This is why seek assistance from Manthan Experts to know which mode of foreign Company is beneficial for your business and to establish and register a Foreign Company in India.