Incorporation of Foreign Company

Expanding Your Global Footprint in India: Strategic Entry Options with Account Assure

Is your international business eyeing the immense opportunities in the Indian market? Establishing a presence in India requires careful strategic planning and meticulous compliance. Account Assure is your trusted partner for seamless incorporation of a Branch Office, Liaison Office, or Subsidiary.

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As a premier Financial Audit Firm, Account Assure possesses an in-depth understanding of both Indian corporate laws and foreign exchange management regulations. We bring our expertise and global perspective to guide your international venture through every step of establishing a compliant and efficient presence in India.

Foreign Company Under the Companies Act, 2013

Sec 2(42) of the Companies Act, 2013 (‘Act’) defines a foreign company as a body corporate or company that is incorporated outside India, but-

Has a business place in India, whether through an agent or by itself, either physically or through electronic mode
Conducts business activity in India in any other manner

What are the Ways in Which Foreign companies can be Registered in India?

A foreign national can establish a foreign company as a private limited company in India.

Joint venture

A foreign entity will elect a local partner in India with whom it wishes to enter into a joint venture to operate its business in India. A Letter of Intent or Memorandum of Understanding (MOU) is signed between the foreign entity and the local partner, which will state the joint venture agreement basis. The joint venture agreement contains all the business terms, and it must be consistent with regional and international law.

Wholly-owned subsidiary

A foreign national/company can invest 100% FDI in an Indian company through the automatic route for the purpose of registering foreign in India. When a foreign entity invests 100% FDI in an Indian company, the Indian company will become a wholly-owned subsidiary of the foreign entity/company.

A foreign company can register a liaison office, project office or branch office in India to carry on its operations in India. However, opening these offices requires RBI or government approval.

Liaison office

The memorandum of association has to be prepared which will contain the following clauses and information:

The work and the objectives of the society for which it is being established.
The details of the members forming the society.
It will contain the address of the registered office of the society.

Project office

A foreign company can establish a liaison office for all liaison activities in India. The parent company (foreign company) will meet all the expenses of a liaison office through foreign remittance.

Branch office

A foreign company can establish a branch office in India. To establish a branch office, the foreign company must be a large business and provide proof of profitability.

Foreign Company Registration Process in India

Joint venture registration process

A joint venture is a contract/arrangement where two or more parties get together to run a business or achieve a commercial object.
To establish a company in India through a joint venture, the foreign entity/national has to choose a local partner with whom they want to enter into a joint venture.
Then, the foreign entity and the local partner should sign an MOU or a Letter of Intent.
The MOU or a Letter of Intent should state the basis for the joint venture agreement.
The foreign entity and the local partner must negotiate and discuss all the terms of the joint venture agreement thoroughly.
The joint venture agreement must be consistent with regional and international law.
It should contain essential matters like dispute resolution agreements, holding shares, applicable law, transfer of shares, confidentiality, board of directors non-compete, etc.

Wholly-owned subsidiary registration process

A minimum of two directors are required to register a wholly-owned subsidiary, out of which one director must be a resident in India.
All directors must apply for DIN (Director Identification Number) and DSC (Digital Signature Certificate).
The Memorandum of Association (MOA) and Article of Association (AOA) must be drafted.
The shareholders must subscribe to the MOA.
The company’s name must be reserved through Part-A of the SPICe+ form (company registration application).
The registration application must be filled (Part-B of the SPICe+ form) on the Ministry of Affairs (MCA) portal.
The applicant must submit the required documents along with the SPICe+ form. The documents are as follows:
- Address proof of the company
- Indian directors must submit their PAN card, address proof and identity proof.
- Foreign directors must submit their passport and address proof, such as driving license, utility bills or any government license certified by the Indian consular or consulate.
After submitting the required documents, the applicant must pay the applicable fees and submit the registration application.
The Registrar of Companies (ROC) will verify all the documents and SPICe+ form.
When the ROC verifies the correctness of the form, he/she will issue the Certificate of Incorporation and the PAN number.
The company must open a bank account.
After the subscription of the company share, share capital documents must be submitted for FDI compliance.

Process of setting up a liaison office

A foreign company can open a liaison office in India with the prior approval of RBI. The process is as follows:

The foreign company must have a profit-making record during the prior three financial years in the home country. Its net value should not be less than USD 50,000 to set up a liaison office in India.
The foreign entity should forward the application to establish a liaison office to the Foreign Exchange Department through a designated Authorised Dealer Category–I Bank (AD).
It should file the English version of the certificate of incorporation/registration or MOA or AOA and its latest audited balance sheet attested by the Indian Embassy or Notary Public in the country of registration.
The RBI will give the liaison office a unique identification number.
The foreign company has to obtain PAN from Income Tax Authorities when setting up the liaison office in India.
All the expenses should be met entirely through inward remittances of foreign exchange from the Head office located outside India.
If a foreign entity that is also a subsidiary of other company does not fulfil the above condition, it can submit a Letter of Comfort from its parent company if it satisfies the above conditions.
A foreign insurance company can establish a liaison office after getting approval from the IRDAI (Insurance Regulatory and Development Authority)
A foreign bank can establish a liaison office after getting approval from the Department of Banking Regulation (DBR).

A liaison office can undertake the below activities:

Representing the parent company or parent company in India.
Promoting export or import in India.
Promoting financial or technical collaborations on the group or parent company’s behalf
Coordinating communications between the parent or group companies and Indian entities.
However, it cannot undertake any business activity and earn any income in India.

Process to set up a project office

The RBI prescribes the process for setting up a project office in India by a foreign company when the following conditions are fulfilled:

A foreign company can establish a project office without prior permission from RBI only when it has obtained a contract from an Indian company for executing a project in India.
The project should be funded directly by inward remittance from abroad.
The project should be funded by a bilateral or multilateral International Financing Agency.
An appropriate authority has cleared the project.
A company or Indian entity providing the contract has been granted a term loan by an Indian bank or Public Financial Institution for the project.

If the above conditions are not complied with, the foreign entity must approach the RBI for approval to set up a project office.

Process of setting up a branch office of a foreign company

A foreign company can open a branch office in India and conduct business activity with the prior approval of RBI. The process is as follows:

The foreign company should be engaged in trading or manufacturing activities.
It should have a profit record during the preceding five financial years and a net worth of not less than USD 1,00,000 in its home country.
The foreign entity should forward the application to establish a liaison office to the Foreign Exchange Department through a designated Authorised Dealer Category–I Bank (AD).
It should file the English version of the certificate of incorporation/registration or MOA or AOA and its latest audited balance sheet attested by the Indian Embassy or Notary Public in the country of registration.
RBI will give the branch office a unique identification number.
The foreign company has to obtain PAN from Income Tax Authorities when setting up the branch office in India.
All the expenses should be met entirely through inward remittances of foreign exchange from the Head office located outside India.
It requires specific approval from the Reserve Bank of India (RBI) under FEMA 1999 and approval from the Insurance Regulatory and Development Authority (IRDA).
If a foreign entity that is also a subsidiary of other company does not fulfil the above condition, it can submit a Letter of Comfort from its parent company if it satisfies the above conditions.

Obtain Trust Registration Certificate

After reviewing the submitted documents, the trust will be registered if the registrar is satisfied with their validity and compliance. The registrar will issue a trust registration certificate, which the trustees and the trustor should keep. They can also proceed with the trust registration certificate download as per instructions. Once the trust is registered, a bank account can be opened in the trust’s name.

Our Comprehensive Incorporation and Compliance Services

Account Assure provides end-to-end support for establishing your foreign company’s presence in India, ensuring complete compliance and efficiency:

For Liaison Office (LO) & Branch Office (BO):

Entry Strategy Consultation: Advising on the most suitable option based on your business model and objectives.
RBI Approval Process: Meticulous preparation and filing of Form FNC (Application for establishment of Branch/Liaison Office in India) with the Authorized Dealer Category-I bank, and subsequent coordination with RBI.
Registration with Registrar of Companies (RoC): Post-RBI approval, filing Form FC-1 within 30 days for registration with the RoC.
PAN & TAN Application: Obtaining Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN).
Bank Account Opening: Facilitating the opening of a dedicated bank account in India.
FEMA & Income Tax Compliance: Guidance on ongoing compliance, including annual activity certificates to RBI, annual financial statements filing with RoC, and income tax return filings.

For Wholly Owned Subsidiary (WOS) / Joint Venture (JV):

Entry Strategy & FDI Policy Consultation: Advising on the most suitable route (WOS/JV) and navigating the Foreign Direct Investment (FDI) policy, including sector-specific limits and approval routes.
Digital Signature Certificate (DSC) & Director Identification Number (DIN): Facilitating the acquisition of mandatory DSCs and DINs for all proposed directors, including foreign nationals.
Name Reservation: Assisting in selecting and reserving a unique company name with the Registrar of Companies (RoC).
Drafting of Memorandum of Association (MoA) & Articles of Association (AoA): Expertly drafting these critical constitutional documents, ensuring they align with your parent company’s objectives and comply with Indian law.
Preparation of Ancillary Documents: Compiling all necessary affidavits, declarations, board resolutions from the foreign parent company, and consent letters.