That’s how to do it step-by-step
How a foreigner can start business in India. Source: depositphotos.com
India is a lucrative place for doing business, having the second fastest-growing market in Asia. There are plenty of business opportunities available there in different sectors due to the rapid increase of technologies and comparably low investments required. Foreigners are also welcome to start business in India.
Prepare the necessary documents
To officially register your business in India, you will need the following documents:
- IDs of all the company’s directors and shareholders (partners in case of LLP). Passports, Aadhar cards, Pan cards, or driving licences can be used.
- Proof of address of all the directors and shareholders (partners). E.g. latest telephone or electricity bills (not older than 2 months), bank account statement with the address data.
- Director Identification Number (DIN) or Designated Partner Identification Number (DPIN) in case of LLP and Digital Signature Certificate (DSC) of all the directors (partners in case of LLP).
- Proof of registered office of the company in India (tenancy or rental agreement; sale deed of the premises; landlord’s letter of permission to use the office/premises as the company’s registered office).
- The Memorandum of Association (MoA) that specifies objectives for which the company has been formed, its relationship with shareholders, and the liabilities of the members of the company.
- The?Articles of Association?(AoA) that define the rules and regulations for the internal management of the company, and specify the duties, rights, and powers of the company’s management.
*Any existing foreign company can establish its place of business in India as well. There is no need to apply and obtain DIN for Directors of a foreign company. However, it is mandatory to have an authorised representative in India with their DSC needed for registration.?
How to get DIN and DSC?
DIN can be obtained while filing the SPICe+ form, i.e. company registration form for a maximum of three directors. If there are more directors in the company and they do not have a DIN, the company can be initially incorporated with three directors. It has to appoint new directors after incorporation. The appointed directors can obtain DIN by filing the DIR-3 form.
DIN for foreign nationals can be obtained by providing a copy of the foreign passport that is notarised and apostilled. The passport copy attached for the foreign national DIN applicant must contain the date of birth of the applicant. If the passport does not include the date of birth, then an additional proof containing the date of birth must be submitted. This document should also be duly certified or attested.
If the ID or address proofs are in languages other than Hindi / English, they should be translated into Hindi / English by a professional translator. The translated documents must carry his/her details (name, signature, address) and seal. In the case of foreign nationals, translation done by the notary of the home country is also acceptable.
There are eight Certification Agencies authorised by the CCA to issue Digital Signature Certificates (DSCs). The DSCs are typically issued with one or two year validity and must be regularly renewed. Obtaining a DSC incurs a fee which is not fixed, but depends on the certifying organisation.
To acquire a digital signature, you’ll need to provide the following documents:
- Photocopy of your passport front and back attested by the Embassy of your native country / notarised.
- Attested photocopy of your visa (for NRIs and foreign citizens).
- Attested copy of resident permit.
- Bank statement with seals and signature.
- If the applicant has a PAN, an attested copy of the PAN is mandatory.
- Photocopy of driving licence (Appostile is needed in case of NRI or foreign person).
Some of the Certification Agencies may accept applications from foreign nationals online. In that case, some video and photo confirmation will take place.
Choose the company type and name
In India, there are six main types of legal businesses: Private Limited Company, Sole Proprietorship, One Person Company, a General Partnership firm, a Limited Liability Partnership, and a Public Limited Company.
Private Limited Company – suitable for fast-growing businesses that will require funding from venture capitalists (VCs). This business type limits the liabilities of its shareholders and enables them to offer employee stock options to attract top talent.
Limited Liability Partnership – this type of business is less expensive and brings fewer compliance costs. LLP? limits the liabilities of its partners to their contributions to the business and offers each partner protection from negligence, misdeeds or incompetence of the other partners.
General Partnership – here, partners are personally liable for the debts of the business. However, this business type still attracts startup founders with low costs, ease of setting up and minimal compliance requirements.
Sole Proprietorship – owned and managed by a single person, this business type is very popular among small traders and merchants. Moreover, there’s no separate registration required so the beginners will choose it eagerly.
One Person Company (OPC) – this enterprise type is an upgrade of the sole proprietorship. If an individual entrepreneur has revenues under Rs. 2 crore and paid-up capital smaller than Rs. 50 lakh, they can enjoy full control over the company whereas the liability to business contributions will be limited.
Public Limited Company – the liability of its members is limited to shares they hold. These companies are usually businesses with a high turnover which offer shares to the general public. They are formed by the voluntary association of persons with a minimum paid-up capital of 5 lakh rupees.
Before registering the name of your business, make sure the proposed name does not contain any legally prohibited words by copying existing trademarks. Please, use the official MCA website to do the name search. You can also reserve the name of the proposed company through online service RUN on the MCA website.
File the application forms
The incorporation process in India takes place online.
To fill out the SPICe+ form and submit documents, the director of the company has to register on the MCA portal. SPICe+ is an integrated Web form offering 10 services by 3 Central Govt Ministries & Departments. It is a part of various initiatives and commitment of the Government of India towards Ease of Doing Business (EODB).
Existing foreign companies should fill out another eForm FC-1. However, their authorised representatives in India must also register on the MCA portal with their DSC.
After you complete the required form, a professional must certify that all the information given in the form is correct. The professional can be a Chartered Accountant, Company Secretary, Cost Accountant or advocate.
Memorandum of Association and Articles of Association are separate forms that need to be added to your application.
It is mandatory to use eMoA (INC-33) and eAoA (INC-34) if:
- individual subscribers are Indian nationals;
- individual subscribers are foreign nationals but have valid DIN and DSC and also submit proof of a valid business visa;
- non-individual subscribers are based in India.
Physical copies of MoA/AoA are required to be signed and attached in case non-individual first subscribers are based outside India, or individual foreign subscribers do not possess a valid business visa.
During the e-Filing process, the system will prompt you to make payment. You can choose the mode of payment and make the payment via Internet banking or using a credit card. You can also make payment at the counter of an authorised bank through the pre-filled challan generated by the system after e-Filing. State Bank of India, Punjab National Bank, Indian Bank, ICICI Bank, and HDFC Bank are authorised to accept such payments. However, you must additionally check whether the e-Filing fees can be paid at any particular branch.
Get the Incorporation Certificate
The Registrar of Companies (ROC) is an office under the Ministry of Corporate Affairs (MCA), which is the body that deals with the administration of companies and Limited Liability Partnerships in India. At present, 22 ROCs are operating in all the major states. The ROC provides incorporation certificates which are conclusive evidence of the existence of any company. A company, once incorporated, cannot cease unless the name of the company is struck off from the official register.
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