Foreign Company registration in India – Compliance under Companies Act

Foreign Company registration in India

One of the most important developments in 21st Century is that the world has become a global village which have helped companies to work in different countries with minimal trade barriers and improved economic conditions.

Every year, thousands of foreign companies are incorporated in India owing to its huge market potentiality, democratic regime, English speaking population, cheap and highly skilled work force and investor friendly policies of the Indian government

Foreign company registration in India

Foreign Company means anybody corporate or company incorporated outside India and which-

(a) has a place of business in India whether by itself or through an agent, physically or through electronic mode; and

(b) conducts any business activity in India in any other manner.

Various Options for foreign company registration in India

There are various options available for foreign company registration in India as mentioned below:

a)      In the form of Liaison office

b)      Branch office

c)      Subsidiary company registration in India

d)     Limited Liability Partnership

e)      Joint Venture

It may be noted that liaison office (LO) and branch office (BO) are considered as foreign entities in India where as other 3 entities are considered as normal Indian entities.

Both LO and BO has to take prior permission of Reserve Bank of India before business setup in India. Further, they need to do some compliance under companies Act as mentioned below.

Compliance by BO and LO under companies Act

Foreign Companies have to follow the Companies Act, 2013, Companies (Registration of Foreign Companies) Rules, 2014, and FEMA and RBI guidelines issued from time to time.

Pursuant to the applicable rules and regulations where at least fifty percent of the paid-up share capital (equity or preference), of a foreign company, is held by

·         one or more citizens of India or

·         one or more companies or bodies corporate incorporated in India, or

·         one or more citizens of India and one or more companies or bodies corporate incorporated in India,

singly or in the aggregate, such company shall within thirty days of the establishment of its place of business in India deliver to the registrar of the Company the following documents:

a)      E-form FC-1 along with documents required for registration and relevant fees digitally signed by the authorized representative, also at this stage, there is no requirement of applying or obtaining DIN for directors.

Also, such application shall be supported by an attested copy of approval from the Reserve Bank of India under Foreign Exchange Management Act or Regulations, and also from other regulators such approval is required by a such foreign company to establish a place of business in India, however where no such approval is required the application shall be supported by a declaration from the authorized representative of such foreign company declaring that no such approval is required.

In case of any alteration in the documents delivered to the registrar, the foreign company shall intimate such changes to the registrar by filing Form FC-2 within thirty days of alteration where such form shall contain the particulars of such alteration.  

b)      Copy of MOA and AOA in the English language

 

c)      Proof of address of the registered office or principal office

 

d)     List of directors and secretaries of the Company

 

e)      The name and address of one or more persons authorized India authorized to accept on behalf of the company service of process, notices, and other documents required to be served on the company;

 

f)       The full address of the office in India which is deemed to be its principal place of business in India the Company.

Further, LO and BO has to file annual return with ROC in form FC-3 and FC-4 along with copies of annual financial statements of both Indian entity as well as foreign entity.

Also, in case of change of registered office address, every foreign company is required to intimate to ROC such change, within 30 days.

Compliance by WOS, LLP and JV under companies Act

Unlike BO and LO, approval for registration of WOS, LLP and JVs are given by Registrar of Companies (ROC). MCA has prescribed the relevant forms which need to be filled by every private limited companies or public limited companies or LLP for applying for registration.

Post company registration in India, WOS and LLPs are require to file annual returns with ROC with copies of annual financial statements attached with the same.

Further, at the time of each change in the company or LLP like change of name, registered office address, change of directors/partners, change of shareholding etc., ROC need to be intimated about such changes.

Therefore, there are lot of compliances to be done by every foreign company both at the time of incorporation as well as every year either annually or on basis of happening of particular events and all these compliance are important which shall be taken into consideration at the time of foreign company registration in India.

  

Location: Europe

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