Company Registration in India for NRI/Foreigners

 

Introduction

India is one of the fastest growing economies in the world today and under the charming leadership by Prime Minister Narendra Modi, India has become the 1st choice of investment for various foreigner/NRI’s.

As said, many foreigners or NRI's wants to start their operations in India to take advantage of the huge market, cheaper resources and prospect of emerging market.

However, due to complex business setup procedure and many investors turn their head down to India. Hence, we have written this article to explain the things in a better way. Let us discuss the different parameters as to how NRI and foreigner can start their business in India.

 

Which entity should NRI or Foreigner?

Though there are various entities which can be formed by the NRI or foreigners in India, the best-recommended form of business is a private limited company. This is because the private limited company is the only form of business which can accept foreign investment under the automatic route.

Also, you also need to look out for the business you are in because as per Indian law, there is a sector wise limit for accepting foreign investment in India.

In other words, there are two ways by which a foreigner or NRI can make the investment into the company:

• Automatic route: Under this route, investment by NRI or foreigners can be made without any prior approval of the government or the RBI. Only an intimation is to be made to the government that the funding has been received from the company.

• Approval route: Under this route, investment cannot be made into the company until and unless the approval has been received from the government.

Most of the entities come under the approval route except the LLP and the private limited company. However, out of the two, private limited company is considered the more appropriate form of business.

Hence, we shall not shape our articles in different steps so that one can understand how he can invest and register a private limited company in India.

 

Complete registration procedure for NRI and Foreigner in India

Company registration procedure for NRI and foreigners is the bit different as compared to the local resident. Hence, we will explain to you the documents requirement so that you do not face the rejection from the government authorities over company registration in India:

 

#Requirement no.1 – Arrange documents for company registration

The first step for company registration is to arrange the documents. This is because all the process for company registration shall be based on documents you serve. Hence, it is necessary that you arrange all the documents properly. Here is the list of documents required:

Documents required by Non-Resident Indian (NRI)

• PAN card/Passport
• ID proof – Any one – (Aadhar card, Voter ID card, DL, Passport)
• Address proof of the home country in which the person is residing, i.e. driving license, mobile bill, any government address proof of that country etc.

 

Documents required by foreign nationals

• Passport (No PAN card is required)
• Passport shall be served as ID proof
• Address proof of the home country in which the person is residing, i.e. driving license, mobile bill, any government address proof of that country etc.

 

#Requirement no.2 – Getting documents Apostle/notarized

Once the documents are arranged properly, the next step is to get them notarized/apostle from the Indian embassy of the home country. This is an important step because if any NRI or foreign national wants to incorporate the company, then they need to get the documents apostle/notarized from the Indian embassy.

 

#Requirement no.3 – One director should be resident in India

As per Indian law, any one of the directors must be the resident of India. A person is treated to be a resident in India if he or she stays in India for 182 days or more.

 

#Requirement no.4 – Digital Signature Certificate (DSC) and Director Identification Number (DIN)

To become a director in Indian Company, DIN is mandatory. One must obtain a DIN before becoming Director of a Company. For obtaining DIN, Digital Signature Certificate of the applicant is necessary.

The documents which are required for obtaining Digital Signature Certificate (DSC) by a foreign resident, NRI are as under:-

• One passport size photograph
• Documents as stated above
• DSC application form

Further, all the documents shall be required in hard copy. Once the digital signature is made, then the professional can proceed to file the application for DIN.

 

#Requirement no.5 – Selecting the company name for registration

Once the DSC and DIN are ready, the next step is to file for company name approval. The company name approval is required to be filed in a FORM INC 1 along with it 6 names in order of priority.

While selecting the company name, one should be aware of the following:

• The company name should be unique and should end with Private Limited.
• The company name should be matched with any registered trademark.
• The company name should not contain any restricted word.

Further, once the name is approved, the same is valid for 60 days.

 

#Requirement no.6 – Filing for Company Registration

The final step in incorporation process is to file the Company incorporation forms. The Ministry of Corporate Affairs (MCA) has introduced a groundbreaking initiative titled SPICe under form INC-32. Here you need to make certain important decisions like:

• Decide the ownership details i.e. the share capital
• Deciding the terms between the founders and directors through Articles of Association (AOA).
• Deciding the scope of business through Memorandum of Association (MOA).
• Preparing lots of documents on stamp paper so that all the documents need to be sent to the MCA department.

 

Once the incorporation forms are filed, we need to wait for their approval. Once approval is granted, your company is formed. Further, you don’t need to file the PAN and TAN separately, as they are allotted to you instantly once the filing is done.

 

#Requirement no.7 – Opening the Bank account and investing money

Once the company is registered, the next step is to open the bank account of the company. Since you have all the required documents, the company bank account can be opened easily without any trouble.

After your bank is opened, the next step is to invest money into the same as per the capital contribution decided in the incorporation step. Further, once you have received the payment, you need to intimate to the government.

 

#Requirement no.8 – Compliances after incorporation

Since the company has received the foreign investment in India there are various other compliances which are to be made as per the local laws in India. Therefore, there are high compliances when you register private limited company in India and on which you are seeking foreign investment.

 

Conclusion

We have tried to explain you the company registration procedure for NRI and foreigner in a very simple language. Hence, in case you have any issues or need help in company registration, then email us at info@hubco.in.