20
Nov

Can a foreigner open a company in India?

An inevitable part of the process of business expansion across the globe is setting up companies on foreign lands, the market scenarios and associated regulations of which you have to understand. Owing to the evolving business ecosystem and opportunities a keen interest in setting up a business in India by foreign companies has developed. One way through which you can register your company in India is a Wholly Owned Subsidiary (WOS).    

  1. Brief overview

WOS is the best setup method to determine a firm hold on the entire share capital of a company established in India by a foreign-based entity. Now, what does WOS actually mean? When any organization established outside of India makes a Foreign Direct Investment of 100% towards a company incorporated in India, then the latter will be called the WOS of the parent company where the foreign entity will hold full ownership of the subsidiary company. According to Foreign Investment Policy, there are two ways that one can follow through to establish a Wholly Owned Subsidiary- one being the automatic route where FDI is permitted without seeking approval from Government bodies while the other way includes acquiring approval from FIPB. 

  1. Characteristics and types of  WOS

The main characteristics of WOS are that it falls under the purview of the Indian Companies Act 2013, allows or permits business activities like marketing, manufacturing, services corresponding to various industries, and is eligible for deductions and exemptions similar to domestic companies as a WSO is considered or treated as a domestic Indian Company.

There are two forms in which the company can be incorporated, each bearing different features.

  • Private Limited company needs a capital investment of Rs. 1,00,000 and a minimum of 2 Directors and Shareholders wherein one of the directors need to be an Indian resident. It doesn’t allow debentures or the sale of its shares to the public. 
  • Public Limited Company needs the minimum number of shareholders and capital investment to be seven and Rs. 5,00,000 respectively. The number of directors required is at least three and before transacting business must publish a prospectus. 
  1. Registration documents and process

The documents required for the registration process are 

  • PAN Card is required but is not necessary in the case of a Foreign Director.
  • Aadhar Card, Voter ID, Drinking License, or Passport is needed as address proof. 
  • For a Foreign Director Passport is necessary for registration which should be English Language and duly apostilled.
  • 3 passport-sized photographs are needed.
  • Electricity bills, lease or agreement is required as a proof for the Registered Office.
  • All the documents must be duly apostilled if the proposed Director is in a foreign country. The same is not applicable if the Director is in India.
  • Electricity bill, bank passbook, telephone bill, and credit card statement- any one of these is needed. 

The registration process involves the submission of all the required documents to the Concerned Registrar of Companies (ROC) that needs to be followed up with receiving the receipt of Certificate of Incorporation. Now, before any of this can be achieved all the directors of the company need to receive DIN (Director Identification Number)  and digital signatures. The accompanying steps include opening a bank account, drafting, and subscription to the Memorandum by the shareholders, applying for a PAN Card, and for FDI compliance the submission of necessary documents. 

For your business to be in compliance with all the regulations of India FDI reporting needs to be done after the registration process. For a company to make FDI reporting to the RBI a bank account of the company needs to be opened in India all of which can easily be completed by a legal or accounting professional.

It is imperative to understand all the nuances attached to establishing a business in a foreign country. One must be well prepared to avoid risk and provide the best environment possible for their business to flourish. This is where DBPL works its magic by being the one-stop solution that one requires for opening a company in India. 

We facilitate your success by supporting you through every aspect of foreign company registration in India. It ranges from the research to deduce business feasibility, registration process, and compliances, asset transaction followed up with build solutions. We also provide operational support and asset management so that the differences in the culture and the working environment doesn’t slow down your progress.