Business set up in India
Corporate Leaps works as a one stop solution to set up and run a business in India. We also offer assistance in establishing your business entity by carrying out comprehensive research to understand the prevailing market scenario. We carefully evaluate your competitive landscape and analyze industry trends. With the information collated, we help in creating your strategic investment plans and provide suitable solutions for positioning your business for a strong entry into the Indian market.
India offers a number of opportunities for foreign investors that you can consider while entering this diverse, yet complex, market. Along with choosing the type of company, you also need to select the kind of entity that you wish to set up in India. Here are the entry strategies that you can pursue in order to set up their operations in India.
A liaison office helps you to represent your parent company in India. It works as a communication channel between your company and your vendors and customers. You can participate in conferences, workshops, and technical discussions to carry out marketing and promotional activities for your company’s products. However, a liaison office is barred from any commercial activity, directly or indirectly.
A branch office is the best suited option to undertake activities such as export & import of goods, establishment of manufacturing units, and research and consultancy. You can take care of your marketing & promotions from your branch office, and provide technical support & after sales services to your customers. If your company manufactures products, the branch office can carry out manufacturing in India through subcontracting as well.
You can set up your own office in India to execute short-term or long-term projects in the country. After completion of the project, the project office can remit surplus funds to your parent company. There is no specific permission required; you only have to meet specific guidelines defined by RBI.
You can form a joint venture company or a joint venture limited liability partnership with a private limited company or a public company in India. By entering into a strategic alliance with an Indian associate, you can avail their infrastructure, distribution channels, marketing network as well as financial resources. While you have to abide by the regulations mandated by the Government of India, you will have the flexibility to function independently in the same area of business without an NOC from your Indian counterpart. You can also draw your own contract in order to protect your intellectual property.
Wholly owned subsidiary
Setting up a wholly owned subsidiary enables you to diversify and manage while retaining full legal control of your operations, products, and processes. It is treated as a domestic company and all the Indian compliances and tax structures will be applicable on your company. There will be no restrictions on the activities of your company and the profits can be distributed among shareholders after payment of dividend tax. You have to follow a defined process as drawn in Indian Companies Act, 1956 in order to register as a wholly owned subsidiary in India.
The regulations for foreign ownership of businesses in India are governed by the updated Companies (Amendment) Act 2013. Depending on the nature of the business, you will have to follow a range of varying guidelines to set up a new business in the country. Foreign Direct Investment policy of India integrates a number of documentations and approvals that you have to procure from the concerned Administrative Ministry and/or departments including Ministry of Corporate Affairs (MCA), Reserve Bank of India (RBI) and Registrar of Companies (ROC). Apart from this, in accordance with the advisory under Companies Act and Foreign Exchange Management Act, there are necessary post-formation regulations that your company will have to comply with.
Corporate Leaps has a clear understanding of the bureaucratic regulations, legal requirements as well as cultural aspects that influence consumer behavior. Our specialized team comprises a panel of experts who liaison with concerned agencies and undertake all the activities on your behalf to obtain all the regulatory registrations and documentations.
The process of setting up a business in India has become easier over the years. But businesses looking to open a company in India must have an understanding of the various aspects of company formation before entering the dynamic Indian market. It is important that businesses choose the appropriate structure to form a company in India, to operate successfully in the Indian business environment and make the most out of their establishments. Any new company incorporation also requires a number of formalities and documentation. Let us take you through all of these one-by-one -
1. One Person Company
As the name suggests, an One Person Company (OPC) is a business set up by a single person but is a separate legal entity. Under Companies Act 2013, a company can be established with one director and one member, and provisions have been made for both the positions to be held by the same person. Any resident or non-resident Indian can easily incorporate and operate in OPC with a minimum authorised capital amount of INR 1 Lac. This option is most suitable for start-ups and small businesses.
2. Private Limited Company
A business registered by a non-government organisation that is comparatively smaller in size can be a private limited (Pvt. Ltd.) company. This kind of company must have at least two members and can have up to 200 shareholders. Trading shares on stock exchanges is restricted for such a company structure and public subscription of shares is prohibited.
3. Public Limited Company
Unlike a Pvt. Ltd. company, a public limited company can trade shares in stock exchanges and sell them to the general public while also holding a limited number of its own shares. This structure of formation must have a minimum of seven shareholders and the members’ liability is limited to the shares they hold. The shareholders also have unrestricted rights to transfer shares, but the company has to publish a prospectus while issuing shares to the general public.
4. Section 8 Company
Section 8 companies are distinguished by their special nature of formation. Any private limited or public limited company can be converted into a section 8 company if it is formed to promote commerce, arts, science, sports, education, research, social welfare, protection of environment or for any such similar object. Such a company enjoys the privileges of limited liability but the restriction to use “limited” in the company name is relaxed.
5. Sole Proprietorship
This is a single owner business entity whose legal identity is not distinct from its owner, and as such, the owner is completely accounted for the liabilities of the business. The establishment of a sole proprietorship is simple and inexpensive, and has minimum compliances to adhere to. Forming a sole proprietorship doesn’t require any legal formalities and only requires registration under the Shop and Establishment Act.
6. Partnership Firm
When two or more people collaboratively establish a business venture, it is termed as a partnership firm. The partners are equally accountable and individually responsible for the liabilities and the obligations are governed by the partnership deed that they sign up for. This type of company structure is ideal for businesses that require minimum or no external funds. The maximum number of partners is limited to 50 members.
7. Limited Liability Partnership
Often referred to as LLP, this is an amalgamated business structure that lies between a partnership firm and Pvt. Ltd. company. While it is a corporate entity, the members benefit from the limited liability framework while also enjoying the flexibility to operate on mutually beneficial agreements. There are no upper caps to the number of partners in an LLP, there needs to be a minimum of two partners, one of them being an Indian resident.
Company Registration Process in India
Company registration in India is subject to the guidelines by the Central Registration Centre and Registrar of Companies (ROC) under the Ministry of Corporate Affairs (MCA), as provisioned under the Companies Act 2013. Here’s a quick look at the process -
- Check availability of Company name
- Obtain Director Identification Number (DIN)
- Digital Signature Certificate (DSC)
- Create a new user account in MCA portal
- Submit Form Spice 32
- Submit Memorandum of Association and Articles of Association in Spice 32
- Insert digital signature to forms 49A (PAN) and 49B (TAN) and re-upload
- Make payment of designated registration fee
- Verification of documents by ROC
- Obtain Registration Certificate
Read in details about the company registration process here: