10 May 2008
A resident indian and foreign national wants to incrporate company for dealing in services related to stock markets etc....Foreign national will be subscriber to MOA and AOA,
Whether any specific approval from RBI is required for this?
Can indian resident to whom power of attorney is issued by foreign national sign the MOA and AOA? Documents are required to be submitted at Mumbai ROC.
10 May 2008
FOREIGN NATIONAL CAN BE SUBSCRIBER TO M/A.
RBI APPROVAL REQUIRED FOR INVESTING IN EQUITY SHARES.
POWER OF ATTORNEY CAN BE GIVEN TO A RESIDENT TO SIGN M/A,A/A.
FAQ ARE GIVEN BELOW:
How do we comply with the legal formalities when we are not stationed in India? You can give Power of Attorney to a person to sign the documents on your behalf. After the Company is incorporated, you can appoint Alternate Directors, to function on your behalf while you are not in India. But at least once, you should be in India within one month of the incorporation of the Company. There can be one meeting of Board of Directors during your stay in India and all other formalities including those of appointment of Alternate Directors can be complied with.
What other approvals are required for foreign investor in India?
It is mandatory for foreign investors to obtain governmental approval for incorporating in India or forming a joint venture in India. In some sectors certain restrictions apply. Proper legal advice must be obtained before incorporating in India to ascertain the eligibility and applicable restrictions.
Generally, prior approval is required from the RBI before investing in India. Some categories of businesses are covered under automatic approval process. However, one has to apply for the same. There are some post-incorporation filing formalities after the remittance of capital from overseas to India and on issue of shares.
Allot the shares against the inward remittance in foreign currency.
Notify Reserve Bank of India (RBI) for the shares allotted to foreign citizens.
Make payment of fees to the C.A./Lawyer, for formation of the company, out of the funds deposited in the bank.
FAQ:
setting-up Companyin India by foreign NATIONAL
Q – Do we need to have some Indian person as a Director in the Indian Company?
Ans. Legally, both the Directors & shareholders can be foreign nationals. However, initially it may be more practical to have at least one Indian Director, who will resign after the Company is registered and all the initial registrations are completed.
Q – What is the minimum Share Capital required in the Indian Company?
Ans. The minimum authorized and paid-up capital of the Company will be Rs.1,00,000/-(US $2,200) which has to be remitted in foreign currency into the bank a/c of theCompany in India.
Q – Can the Company be formed without physical presence of the foreign Distributor in India?
Ans. Yes, it is possible by authorizing some local resident in India. However, to build a business, you will be coming to India in any case. Hence it is advisable that atleastone Director/shareholder should be physically present in India. Alternatively, he will have to execute a Power of Attorney in favour of a local Indian who will represent them in India. This document has to be notarized by the Indian Embassy in the foreign country. source:www.madaan.com
Purchase of Shares and Securities by Non-residents
10A.1 In terms of Section 29(1)(b) of FERA 1973, no person resident outside India, whether an individual or a firm/company (other than a banking company) incorporated outside India, can acquire shares of any company carrying on trading, commercial or industrial activity in India without permission of Reserve Bank. Permission of Reserve Bank is also required for transfer or issue of any security (which includes shares, debentures, bonds, etc.) to a person resident outside India in terms of Sections 19(1)(b) or 19(1)(d) of the Act. While granting permission for transfer or issue of shares to a non-resident investor under Section 19(1)(b) or 19(1)(d), permission under Section 29(1)(b) for purchase of shares by him is granted simultaneously and hence it is not generally necessary for non-resident investors to apply separately for permission to purchase shares in Indian companies in such cases.
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