The NRIs and foreign nationals can register a private limited company, public limited company or Limited Liability Partnership (LLP) in India. The private or public limited company allows FDI into India under the automatic route in most sectors. The LLP allows FDI under the automatic route only in those sectors or activities that allow 100% FDI through the automatic route.
As per FEMA guidelines, FDI is not allowed for any other types of business like a proprietorship firm, partnership firm or one-person company. Thus, the NRIs and foreign nationals cannot start a partnership firm, proprietorship firm or one-person company in India.
Considering the FDI and FEMA regulations, the ideal type of business entity that the NRIs and foreign nationals can establish in India would be a private limited or public limited company as FDI is allowed under the automatic route for most sectors.
The foreign promoter can establish a public limited company if the number of investors in the venture is at least seven as it requires a minimum of seven members. The foreign promoter can establish a private limited company with just two members. A private limited company can have up to 200 shareholders, while a public limited company can have unlimited shareholders.
Pre-requisites for Registration of Private or Public Limited Company
Before starting a public or private limited company, the NRIs and foreign nationals should ensure compliance with the following matters.
The Companies Act, 2013 allows the NRIs, foreign residents and foreign nationals to act as directors in an Indian company. The NRIs and foreign nationals must obtain a Director Identification Number (DIN) and Digital Signature Certificate (DSC) to become a director of an Indian company.
A private limited company must have a minimum of two directors, and a public limited company must have a minimum of three directors. There should be at least one Indian citizen director residing in India in the company established by NRIs or foreign nationals.
There should be at least two members for a private limited company and seven members for a public limited company. The private limited company can have a maximum of 200 members, whereas there is no such limit for a public limited company.
The NRIs and foreign nationals can have the shareholding in an Indian company, subject to the FDI guidelines in India. Since RBI allows 100% FDI in various sectors under the automatic route in India, obtaining ownership of shares in an Indian company by an NRI and foreign national is simple.
The proposed company must have an office address in India before going for incorporation. The NRIs and foreign nationals must ensure that the company has an office in India. The office address proof, such as the sale deed or rental agreement, must be submitted when filing the incorporation application.
When the company’s office is situated in a leased or rented property, the NOC (No Objection Certificate) from the owner of the rented or leased premises must be submitted for the use of the premises as a registered office.
Documents Required for Company Registration
The documents required by foreign nationals residing in their home country for incorporating a company in India are as follows:
Address proof such as driving license, bank statement or any utility bill (not older than two months)
All the above documents must be notarised by a Public Notary and be apostilled by the competent authority in their country of residence.
The documents required by foreign residents residing in India for incorporating a company are as follows:
Bank statement or any utility bill (not older than two months)
All the above documents must be attested by the Consulate of the Foreign Embassy in India.
The documents required by NRIs for incorporating a company in India are as follows:
Proof of identity
Adhaar card, driving license, voter ID, if any
Current address proof such as a copy of the driving license, bank statement or any utility bill in the country of residence (not older than two months)
The current address proof must be notarised by Public Notary in the country of residence and apostilled by the Indian Embassy in the foreign country.
As per the provisions of Indian Companies Act, 2013,
Where subscriber to the memorandum (Shareholders) is a foreign national residing outside India, in a country in any part of the Commonwealth, his signatures and address on the memorandum and articles of association and proof of identity shall be notarized by a Notary (Public) in that part of the Commonwealth;
Where subscriber to the memorandum (Shareholders) is a foreign national residing in a country which is a party to the Hague Apostille Convention, 1961, his signatures and address on the memorandum and articles of association and proof of identity shall be notarized before the Notary (Public) of the country of his origin and be duly apostilled in accordance with the said Hague Convention;
Where subscriber to the memorandum (Shareholders) is a foreign national residing in a country outside the Commonwealth and which is not a party to the Hague Apostille Convention, 1961, his signatures and address on the memorandum and articles of association and proof of identity, shall be notarized before the Notary (Public) of such country and the certificate of the Notary (Public) shall be authenticated by a Diplomatic or Consular Officer empowered in this behalf under section 3 of the Diplomatic and Consular Officers (Oaths and Fees) Act, 1948 (40 of 1948) or, where there is no such officer by any of the officials mentioned in section 6 of the Commissioners of Oaths Act, 1889 (52 and 53 Vic.C.10), or in any Act amending the same;
Process of Company Registration in India
Indian company registration procedure by NRIs and foreign nationals is similar to incorporating a company by Indian directors and shareholders. The process is as follows:
Proposed NRI and foreign national directors need to obtain DSC
Proposed NRI and foreign national directors need to obtain DIN
Registration on the MCA (Ministry of Corporate Affairs) portal and filing of Form SPICe+
Upload all the company related documents, including e-MoA and e-AoA
The Registrar will issue the Incorporation Certificate after verification of the application and the documents.
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