Company formation in India

In India, the Ministry of Corporate Affairs is the main body that regulates the company registration in the country, under the Companies Act 1956.  The Act sets down rules and regulations for the establishment of both public and private companies in India though some of these are not applicable to the private limited companies. As such private limited companies are best suited to foreign entities who want to set up their operations with their own money and with less partners and who do not plan for a public issue of shares in India.

In India, the following types of business entities are available and need to undergo very simple and straight forward processes with the e-filing procedures:-

• Private Limited Company
• Public Limited Company
• Unlimited Company
• Partnership Firm
• Sole Proprietorship

In addition, foreign investors wishing to do businesses in India can also opt for one of the following entities based on circumstances of each case :-

• Branch Office
• Liaison Office
• Project Office
• Joint Ventures

Company Registration formalities at a glance

Select the Name of your company

The first foremost step in incorporating a Company is to select a name for your company that will reflect your business as well as meeting the guidelines set by the Ministry of Corporate Affairs, Government of India.  The authorized capital of your company always depends on the inclusion of certain keywords in the name of the company.

Select the type of your company

You have to decide whether you wanted to have a  Private Limited Company or a Public Limited Company based on your requirements and on the overall advantages one type gives on the other.
Select the State where you want to register your company

Based on your requirements, you can decide in which state you want to have your company registered as a registered company can operate from any state and no special requirements other than local VAT registration is required.

Select and define the object of your company

You should clearly define the object of registering your company and should be in relation to the name you have already selected.

Capital requirement

The minimum capital requirement of a Private Limited Company is Rs. 100,000.00 (AED 8,000.00 approx) and for a Public Limited Company, it is Rs. 500,000.00 (AED 40,000.00 approx).  In India, like many other countries, the registration fee of company depends on the authorized capital.

Obtain DIN for your Directors

Any person acting as a director of a company, irrespective of the fact he is a shareholder in that company or not, must furnish his details to the Ministry of Corporate Affairs and obtain the Director’s Identification Number (DIN).  The minimum number of directors for a private limited company is two and for a public limited company, it is three.

Provide the details of the promoters of your company

Promoters of the company are either individuals, companies registered in India or companies registered outside India, subscribing the Memorandum of Association of the company.

Register the company

The last stage is to register the company by filing the documents with the Ministry of Corporate Affairs and obtain the Certificate of Incorporation.

Based on any specific local requirements from city to city, the registration formalities of a company in India can be completed within a week to ten days at the most.

A foreign company planning for business set up in India has  the option of registering a company as a separate entity other than its parent company or to have an unincorporated entity by way of a liaison office or branch office of a foreign company.

Foreign companies can open a liaison offices in India to promote its business interest and explore further opportunities;  it will also act as a communication channel between itself and various Indian companies. A Liaison office can be established immediately after obtaining the required permission from the Reserve Bank of India meeting with its guidelines from time to time on specific requirements of the objective of the proposed  branch or liaison office.

Applications for setting up these offices  may be submitted to Chief General Manager, Exchange Control Department(Foreign Investment Division) RBI, Central office, Mumbai.

Limited Liability Company formation in India

With the introduction of Limited Liability Partnership Act in 2008, the concept of Limited Liability Partnership (LLP) is gaining popularity in India. Limited Liability partnership provides all the benefits of an incorporated company and a partnership firm and at the same time eliminates the disadvantages of both.

In a Limited Liability Company, all partners have limited liability for each individual’s protection within the partnership, similar to that of the shareholders of a limited company. The introduction of LLP in India reflected the Government’s initiative to promote economic development within the framework of international practices.  LLP’s provide an effective alternate to corporate business and is big hit with technical and professional experts setting up their own entities.

LLP incorporation, which is a separate legal entity, is very simple and offer the following advantages :-

• Flexibility of incorporation – less legal/procedural requirements
• Perpetual existence irrespective of changes in partners
• Internationally renowned form of business in comparison to Company
• No requirement of minimum capital contribution
• No restrictions as to maximum number of partners
• LLP & its partners are distinct from each other
• Partners are not liable for Act of other partners.
• Easy to dissolve or wind-up
• Ideal for professionals to form multi-disciplinary professional LLP firms
• No requirement to maintain statutory records except Books of Accounts
• Less Cost of formation (Compared to a company)

Incorporation Procedures

Two or more persons associated for carrying on a lawful business with a view to profit shall subscribe their names to an incorporation document.

The incorporation document shall be filed in such a way as may be prescribed with the registrar of the state in which the registered office of the limited liability partnership is to be situated.

A statement be filed in a prescribed form made by either an advocate, or a company secretary or charted accountant who is engaged in the formation of limited liability partnership, and by anyone who subscribed his name to the incorporation document, that all the requirements of this act and the rules made there under have been complied with in respect of incorporation.

Tax Returns | PAN Cards

A non-resident Indian (NRI) is fully exempt from tax obligations for the income earned outside India, based on his physical stay in India. A NRI however is obliged to pay tax on any income earned or received (or deemed to have earned or received) in India. Apart from filing return of income in India, obtain tax exemptions and provide advises on financial matters from a taxation point of view, we also help NRI’s to apply for PAN Cards.