India's rapidly growing business ecosystem is attracting an increasing number of foreign entrepreneurs and companies seeking to tap into its vast and diverse market. As a result, the demand for online company registration for foreigners has skyrocketed in recent years. This article demystifies the essential aspects of registering a company in India entirely online, without the need for physical presence.
What does Online Company Registration in India for Foreigners mean?
The online company registration in India for foreigners refers to the complete process of incorporating a legal business entity in India through the Ministry of Corporate Affairs (MCA) portal, which can be executed remotely. A foreign national can be a director and shareholder without ever having to visit India, thanks to a fully digital process.
What business structures can foreigners choose in India?
Foreign nationals and entities can choose from several business structures, similar to those available to Indian residents. The most common options are:
- Private Limited Company: This is the most popular choice among entrepreneurs. It offers limited liability protection and requires a minimum of two directors, one of whom must be an Indian resident. A foreign entity can be a 100% shareholder.
- Wholly Owned Subsidiary (WOS): This is a Private Limited Company where 100% of the shares are held by a foreign parent company.
- Limited Liability Partnership (LLP): An alternative to a company, an LLP also offers limited liability. It requires a minimum of two partners, and at least one designated partner must be an Indian resident.
Other structures for representative purposes (require specific RBI approval):
- Liaison Office: It acts as a communication channel between the foreign parent and Indian clients. It is not permitted to carry out any commercial activities.
- Branch Office (BO): It is permitted to engage in specific activities as approved by the Reserve Bank of India (RBI). Its scope is more limited than a subsidiary.
- Project Office (PO): It is established solely to execute any specific project in India.Choosing a structure depends on the nature of the business, desired level of control, liability, and future goals in the Indian market.
How to Register a Company Online without Visiting India?
The process for foreign nationals and entities is primarily handled through the MCA's SPICe+ portal. The stepwise process is described below;
Step 1: Choose a Business Structure (e.g., Private Limited Company): Depending upon the requirement, it's the first step to choose a business structure.
Step 2: Obtain Digital Signature Certificate (DSC): The proposed directors must obtain a Class 3 DSC, which is essential for digitally signing documents.
Step 3: Obtain Director Identification Number (DIN): Apply for a DIN for all proposed directors through the SPICe+ form.
Step 4: Reserve Your Company Name: File the RUN (Reserve Unique Name) form or directly apply through SPICe+ (which allows for name reservation and incorporation in a single form).
Step 5: Draft Required Legal Documents: This includes the Memorandum of Association (MoA) and Articles of Association (AoA).
Step 6: File the SPICe+ Form (INC-32): This is the integrated application form for company incorporation, which also includes applications for DIN, name reservation, and PAN & TAN allotment.
Step 7: Certificate of Incorporation: Upon verification, the MCA will issue a Certificate of Incorporation, legally establishing the company.
Step 8: Open a Bank Account: Use the Certificate of Incorporation to open a corporate bank account in India. Many banks allow this process to be initiated online.
Step 9: Reporting Foreign Direct Investment (FDI): The Indian company must report the incoming investment through the Foreign Currency Transfer (FCT) process in the RBI's FIRMS portal.
Step 10: Register for Taxation: Goods and Services Tax (GST) registration is mandatory if your annual turnover exceeds the specified threshold or if you engage in e-commerce.
Advantages of Company Registration in India by Foreigners
For foreigners, registering a company in India offers several advantages. Some major advantages are as follows;
1. Separate Legal Entity: Company Registration provides a distinct legal identity to both the company and its members.
2. Perpetual Succession: Once registered, a limited company's existence is unaffected, even in cases such as the death, incapacitation, or insolvency of any director/partner, as the business maintains its own identity.
3. Limited Liability: Company registration provides limited liability protection to its members to the amount of share capital unpaid on the shares they hold.
4. Easy to Transfer Ownership: In a limited company, the ownership can be easily transferred by using the method of transferring shares from one member to another.
5. Transparency: This registration ensures transparency, increasing the confidence, support, and participation of stakeholders and parties concerned with the company.
Opting for professional guidance is often advisable for foreigners who want to register their business in India, even if they don't plan to visit the country in-person.
Conclusion
The Indian market offers multiple opportunities to foreigners/foreign businesses. With the increasing ease of doing business in India, the number of foreign businesses tapping into this market is also rising. Navigating the business structures and processes of online company registration in India can help foreigners register their business hassle-free within a shorter span of time.
Tap into a whole new, large, and diverse market with Setindiabiz’s best-in-class online company registration services for foreigners/NRI in India.
CAclubindia
