Process of Incorporation of company by a foreign national in India

 SUBJECT: PROCESS OF A FOREIGN NATIONAL FORMING A COMPANY IN INDIA

Dear Sir,  

By having at least one Indian Citizen or Company as their member, promoter, or director, a Foreign National may register a Company in India to conduct business.

According to Section 379 of the 2013 Companies Act, he must own at least 50% of the share capital of such a foreign company. Then, in accordance with Section 7 of the Companies Act, 2013, it may incorporate a Company in India with the same name as the Parent Company. Such incorporation is governed by the 2013 Companies Act. Without at least one member, promoter, or director who is an Indian Citizen or Company, a foreign citizen cannot incorporate a company in India. Shareholders are not required to be directors.

As an alternative, foreign nationals can also enter the Indian market by owning a wholly-owned subsidiary or by investing in 100% of a private Indian company. It can then make use of the business model of the Company whose shares it has purchased.

Procedure for incorporating a Foreign National Private Limited Company in India 

Step 1- Obtaining digital signature certificate

A Digital Signature Certificate (DSC) is required for verification and validation purposes since the SPICe+ service (online portal) on the Ministry of Corporate Affairs website is used for all incorporation-related tasks for private companies.

A DSC may only be given by the “Certifying Authority” as defined by the Information Technology Act of 2000. A list is provided by the Ministry of Electronics and Information Technology’s Controller of Certifying authority.

Step 2- Preparation of basic documents

Apart from basic documents required under Section 7 of the Companies Act, 2013 for incorporation of a company, the foreign company under Section 380 of the Companies Act, 2013 after the establishment of a place of business in India, has to send the following documents within 30 days to the Registrar of companies (RoC) for registration.

1. A certified copy of a document constituting or defining the constitution of the country, such as a charter or Memorandum of Association (MoU) and Articles of Association (AoA). Foreign companies cannot submit an eMoA (electronic Memorandum of Association) and eAoA( electronic Articles of Association), they have to mandatorily submit the physical copy which is notarised and apostilled as per the Hague Apostille Convention, 1961.
2. Full address of the registered office of the company, in India.
3. List of directors and subscribers of the company containing particulars prescribed under the Companies (Registration of Foreign Companies) Rules, 2014.
4. Name and address of the person who will accept service of summons, notice, or any document served, on behalf of the company. He has to be an Indian resident.
5. Full address of the company in India which will be deemed to be its principal place of business in India.
6. Details of opening and closing of a place of business in India on earlier occasions.
7. Declarations that no director or authorized representatives have been convicted or debarred from forming a company in India or abroad.
8. Any other information. For instance, under Rule 16 of the Companies (Incorporation) Rules, 2014, certain particulars of every subscriber to the memorandum shall be filed with the Registrar at the time of incorporation.

Apart from the above-mentioned documents, certain other documents have to be submitted this includes:

1. Passport and residential proof of foreign nationals (those who will be Directors of the company).
2. Voter ID/DL/Aadhar and residential proof for Indian citizens (who shall be the director).
3. Copy of certificate of incorporation of the foreign body corporate and proof of registered office address in India.
4. A certified true copy of board resolution/consent by all the promoters/shareholders authorizing to subscribe to MOA.

All these documents need to be notarized by a public notary in the country of the parent company of the company as well as apostatized. All documents and particulars are to be filled on-screen under the Part B registration process.

Step 3- Initiation of incorporation through SPICe+

A private company can be incorporated or registered using the SPICe+ web portal found under MCA services on the Ministry of Corporate Affairs website. On-screen foiling and real-time data validation are provided by SPICe+.

So, following PAN and TAN registration, MoA and AoA documents that have been notarized and apostilled in the country of origin will be uploaded.

Additionally, the company name will be reserved through SPICe+. There are two components to the SPICe+:

Part A- Reservation of names for new companies

A new name for the foreign company’s Indian branch may be reserved under Part A. The Central Registration Centre (CRC) offers the opportunity to submit Part A for a thorough name verification, which guarantees that the chosen name is original and does not conflict with Indian law. For the confirmation of the name, a cost of INR 1000 must be paid (name reservation).

According to the regulations, an Indian business may, under certain circumstances, have a name that is identical to that of the parent firm.

The term “India” or the name of any state or city may be added to the end of the business name if a foreign firm incorporates its subsidiary company in India in accordance with Rule 8 of the Companies (Incorporation) Rules, 2014.

Additionally, “PVT” for private and “LTD” Limited must be indicated to denote that the business is a private limited corporation. For instance, Apple Inc.’s Indian subsidiary is officially known as “APPLE INDIA PRIVATE LIMITED.”

Part B- other services and particulars required for the incorporation of a private company

Part B of SPICe+ offers the following services:

• Incorporation;
• DIN allotment;
• Mandatory issue of PAN;
• Mandatory issue of TAN;
• Mandatory issue of EPFO registration (Employees’ Provident Fund Organisation);
• Mandatory issue of ESIC registration (Employees State Insurance Corporation);
• Mandatory issue of Profession Tax registration(Maharashtra);
• Mandatory Opening of Bank Account for the company; and
• Allotment of GSTIN (if so applied for).

Even if directors do not possess any DIN (Director identification number), or Permanent Account Number (PAN), or Tax-Deduction Account Number (TAN) then they can apply for it in Part B itself, thereby integrating multiple procedures.

Step 4- Filing up of AGIL-pro form

A multiple registration facility called AGILE-pro is built into the SPICe+ Part B form. A business can use this to apply for a new PAN, EPFO registration, ESIC registration, GSTIN, and other things. If a business has one of these, all it needs to do is include the information in the AGILE form; otherwise, they can apply for one.

Step 5-Affixing digital signature certificate

Once both SPICe+ and AGILE pro-forms are filled and saved online, the company has to download it in PDF format and affix their DSC on the forms. The signed forms then are to be uploaded again to the Ministry of the corporate website under the upload eform service.

 Step 6-Delivering FC-1 form (mandatory for foreign companies)

Once the place of business has been established, an additional form must be sent to the Registrar of Companies in New Delhi along with a few other details. Only foreign corporations are required to follow this method.

According to Rule 3 of the Companies (Registration of Foreign Companies) Rules, 2014, foreign companies must deliver form FC-1 and an attested copy of approval from the Reserve Bank of India under the Foreign Exchange Management Act or Regulations to the Registrar of Companies within 30 days of the establishment of their business. It needs to be signed digitally.

Step 7- Uploading of forms

Once DSC is affixed on forms- SPICe+, AGILE pro, and FC-1 they have to be uploaded on the MCA website. Navigate to MCA services and select upload eforms.

Step 8-  Examining and granting a certificate of incorporation ( TO BE DONE BY GOVERNMENT OF INDIA)

When all procedures have been followed and all papers have been submitted, the MCA will review all of the paperwork, and if everything complies with the law, it will issue a Certificate of Incorporation in the format of form INC-11.

As previously stated, the process of creating a company in India by a foreign national is similar to that of incorporating an Indian private business, with the exception that a second form must be submitted to the Registrar of Companies. New Delhi, India is home to the foreign company’s Registrar of Companies. A Certificate of Incorporation and an FCRN, or Foreign Company Registration Number, are issued following a successful incorporation.