How to Register a Foreign Company in India

What is a Foreign Company?

A foreign company, also known as an international or multinational company, is a business entity that operates in a country other than the one where it was originally founded or incorporated. These companies engage in commercial activities across borders, conducting business activities in multiple countries.

As per the Companies Act 2013, a foreign company is defined as a company that is incorporated outside India but -

• Has a business place in India, whether remote, physical, or with an agent.
• Or runs any business activity in India.

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Types of Foreign Company in India

India has various options for foreign companies to establish a presence and operate legally. Here are some common types of foreign company registration in India:

• Wholly Owned Subsidiary (Private Limited Company): This is one of the most common options for foreign companies. A wholly-owned subsidiary is considered a separate legal entity from the parent company, and it can engage in various business activities. The parent company has 100% ownership of the shares of the subsidiary. The process involves registering the subsidiary as a private limited company under the Indian Companies Act, 2013.
• Joint Venture: Foreign companies can form joint ventures with Indian partners. In this case, the foreign company and the Indian partners can collaborate to establish a new entity. The ownership and management structure can vary based on the agreement between the parties.
• Branch Office: Foreign companies can establish branch offices in India to carry out specific activities. Branch offices operate as extensions of the parent company and typically have limited functions, such as marketing or liaison work. Permission from the Reserve Bank of India (RBI) is required for set up a branch office.
• Project Office: Similar to a branch office, a project office is set up for a specific project or contract. It is temporary in nature and typically requires approval from the RBI.
• Liaison Office (Representative Office): A liaison office is primarily for representing the interests of the parent company. It cannot engage in commercial activities or generate revenue in India. It is subject to specific regulations and requires approval from the RBI.

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What is the Process of Foreign Company Registration in India?

Joint Venture Registration Process

It is a contract through which 2 parties get together to achieve a commercial objective or run a business. To register a joint venture, the foreign company has to choose a local partner to enter into a joint venture. Both parties must sign a letter of intent or an MOU and discuss all the terms before entering into the agreement.

Wholly-owned Subsidiary Registration Process

There should be a minimum of 2 directors to register a whollyowned subsidiary company in India, out of which one should be an Indian resident.

• All the directors should have a DIN number, and DSC, AOA, and MOA should be drafted.
• The SPICe+ registration form should be filed.
• The applicant has to submit the necessary documents and pay the fees.
• After receiving the certificate of incorporation, the company must open a bank account.

Branch Office Registration Process

A foreign company can open a branch office in India after getting approval from RBI. Following are the conditions -

• The foreign company should be involved in trading or manufacturing
• The company should have a profit in the preceding 5 years and have a net worth of more than 1,00,000 USD.

Process of foreign company registration in India -

• The application should be sent to the foreign exchange department along with its latest audited balance sheet.
• It should obtain a PAN number from income tax authorities
• It should meet all its expenses through the remittances received from its head office located outside India.

Project Office Registration Process

As per the RBI, the project office registration process in India is subject to the following conditions -

• A foreign company can open a project office without RBI approval if it has obtained a contract from an Indian company to complete a project in India.
• The funding of the project should be done by inward remittances from abroad.
• It should get clearance from the appropriate authority.
• The company providing the contract should have been granted a term loan by any bank or financial institution.
• If the foreign company does not meet the above terms and conditions, it should directly approach the RBI to receive its approval.

Liaison Office Registration Process

A foreign company is allowed to open a liaison office in India upon approval from RBI. Here’s the process -
The foreign company should have made a profit during the previous 3 years, and its net value should be USD 50,000.

Process of foreign company registration in India -

• The application should be sent to the foreign exchange department along with its latest audited balance sheet.
• It should obtain a PAN number from income tax authorities
• It should meet all its expenses through the remittances received from its head office located outside India.
• The company can open a liaison office upon receiving approval from the relevant authority.

Navigating the regulatory landscape of foreign company registration in India requires a proper understanding of the options available and compliance with the requisite procedures. Whether you choose to establish a wholly owned subsidiary, enter into a joint venture, set up a branch or project office, or create a liaison office, each path comes with its unique considerations and prerequisites. India allows 100% FDI in most of the activities. This makes India an attractive business destination for foreign companies.

By following these guidelines and taking professional advice, you can complete foreign company registration in India.

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