Soarcio

Only NRIs/ OCIs are allowed to invest in partnership/ proprietorship concerns in India on non-repatriation basis.

Yes, a person can become a director in more than one company or LLP at the same time. Further, a person can become a shareholder in more than one company.

Conversion from one form of company to another is permitted in following manner:

1. Private Limited Company to Public Limited Company and vice-versa: A Private Limited company can be converted to public limited company and vice-versa provided the same is permitted in MOA and procedure specified under Companies Act, 2013 is complied. However, PAN and other registration certificates of the company will remain same only status of company from private limited to public limited will get updated.
2. Partnership Firm to Private limited Company: Option to convert a Partnership firm to company is available but this process includes transfer of business from firm to Company. Newly formed company will be a new business entity having separate PAN, GST registration and other registration. Partnership firms will come to an end whose PAN and other registration will be required to be surrendered.

Forming a company, whether private limited or public limited, is having following advantages:

1. Separate Legal Entity: Unlike sole proprietorships and partnership businesses, private and public limited companies are separate legal entities from their owners. Company can own property, incur debt, borrow money, establish a bank account, enter into agreements and contracts, sue and be sued in its own name.
2. Limited Liability: Members’ liability in a private limited corporation is constrained to the number of shares held by the members. Therefore, if the company experiences financial trouble for any reason, the members’ personal assets won’t be used to settle the company’s debts because their liability is constrained.
3. Perpetual Succession: Private companies have “perpetual succession,” which is continued existence up until their legal dissolution. Therefore, death or addmission of any of the members or directors of the company does not affect the existence of the company.
4. In private corporations, the owners who own the business are in charge of management and control. While the owners retain the majority of the power, the members do have a voice.
5. A private corporation is permitted to lend money to the company’s director and can easily compensate its directors or management, and team members. However, lending to the directors can be done subject to provisions of Companies Act, 2013.
6. According to the Ministry of Corporate Affairs, private enterprises have been given a variety of exemptions from compliance requirements. Compared to public limited corporations, there are fewer compliances and restrictions.

Yes, subject to compliance with provisions of the Companies Act, 2013, Foreign Exchange Management Act (FEMA) 1999, Reserve Bank of India (RBI) Regulations, and Foreign Direct Investment (FDI) Policy, a foreigner can set up a public or private limited company in India. However, there must be at least one resident director on the board of a company owned by an NRI.

Also, with effect from 01.04.2021, an NRI can open a one person Company in India.

*Resident director is defined as a person who stays in India for a total period of not less than one hundred and twenty days during the immediately preceding Financial year.

After a company is incorporated, you can check for its details on a government website run by the Ministry of Corporate Affairs in India. Basic information about the company is available for checking by any person without payment of any charges. Information provided on mca portal is Company’s identification number (CIN), authorised capital, paid up capital, date of incorporation, registered office address, information about the directors, and annual filing status etc.

Further, all forms and documents filed by the company with RoC can be accessed by any person on payment of nominal fees on MCA portal.

Both the companies have different status and different treatment under Income Tax Act and Companies Act.

Domestic Companies are those which are incorporated under Companies Act, 2013 or earlier companies act. Domestic companies have status of resident in India and they are eligible to carry out all operations in India. Further, Domestic Companies are entitled to different tax holidays, concessional rate of taxes in India.

On the contrary, as per Section 2(23A) of Companies Act, foreign companies are those companies which are registered outside India in any other foreign country. Foreign companies can mark their presence in India through setting up LO/BO/PO and it can function under complete supervision of RBI. Further, foreign companies are liable to Income tax at a higher rate.

India is a lucrative option for foreign firms to initiate a business as the Indian government has business-friendly laws supporting foreign firms as well attractive foreign policies and a skilled workforce making India the 6th fastest growing economy in the world.

Following are the additional benefits:
1. Comprehensive Tax system
2. Low operational cost
3. Indian financial system
4. Vast Trade Network
5. Governmental Initiatives
6. Start-up India Movement

Overseas Citizen of India (OCI) is a more privileged form of NRI. Any of the following person is eligible to OCI:

1. who was eligible to become citizen of India on 26.01.1950; or
2. Who was a citizen of India on or at anytime after 26.01.1950; or
3. Who belonged to a territory that became part of India after 15.08.1947; or
4. Minor children of persons who are eligible for OCI.

OCIs are entitled to a multipurpose, multiple entry, lifelong visa allowing them to visit India at any time, for any length of time and for any purpose.

Further, Answer to the question that whether OCI is permitted to do business in India is Yes. An OCI holder can establish a business in India subject to conformity with the terms of the Foreign Exchange Management Act (FEMA), 1999, Reserve Bank of India (RBI) Regulations, and Foreign Direct Investment (FDI) Policy.

OCIs may participate in partnership or sole proprietorship businesses in India in addition to the aforementioned options on a non-repatriation basis.

A Non-resident Indian may commence a business by forming a Company or partnership form or proprietorship concern in India subject to conditions specified by RBI. A non-resident Indian or a foreigner does not require a residency visa to start a business in India.

However, to become director in an Indian Company or partners in partnership concern, the following documents are required:

• Photograph
• Application for Apostilled Digital Signature (You can get it From VJM global)
• All foreign directors’ passports should be apostilled.
• A certified copy of your address (Telephone, Electricity Bill, latest Bank Statement)
• Apostilled driving license copy

Entrepreneurs who are planning to enter into the Indian market should ensure compliance with all the legal obligations of the prospective country. A person looking to enter into Indian market is suggested to follow below points to ensure legit setup in India:

1. Identify purpose of set-up in India. A foreign entity may enter into India to make investment in the Indian market or to have a temporary presence in India to promote its business. Manner of setting up in India depends upon the purpose of set-up.

2. Check FDI Permissibility in India: Once the purpose of presence is identified, the next step is to check whether such presence is permitted in India or not. E.g. If a foreign company is proposing to make FDI in a sector which requires prior approval of the government or which is prohibited or where partial FDI is permitted.

3. Decide form of Business structure to be set-up: Once purpose of set-up and permissibility is identified, Foreign entity can take decision that how it need to mark its presence in India such as Liaison Office, Branch Office, Wholly Owned Subsidiary, Joint Venture, LLP etc.

4. Proceed with Government approval and business set-up process: Once foreign entities identify a form of proposed unit in India, the very next step is to begin with completing legal formalities for setting up such business in India. Foreign entity may need to complete following formalities:
   • Obtaining Government approval, if required: If foreign entity is planning to enter into a sector which requires prior approval of the government, then foreign entity is required to obtain prior approval of the government.
   • Set-up Business entity: Once government approval is received for setting up business, Next step is setting up a business entity. This setup may involved incorporation of company, Forming Partnership firm, set-up LO/BO/PO in India.
   • Obtain registrations: Once a business entity is set-up, it requires multiple registration to function smoothly such as GST, PAN/TAN, Shops & Establishment, professional tax, EPF/ESI Registrations etc.

5. Once the registered entity in India obtains all applicable registration, it may simply commence with business operations in India.

There is a clear preference given for using a similar name as the parent company but in case a similar name can not be acquired then the name has to be unique and not similar to any other registered company. A name similar to or nearly resembles to any existing company’s name, LLP’s name or registered trademarks gets rejected by RoC.

Therefore, generally form RUN (Reserve Unique Name) is filed before initiating the incorporation process to reserve the desired name.

For the purpose of incorporation of the company, investors need to inject a minimum initial share capital of INR 10,000 in case of private company and INR 5,00,000 in case of public company at. For the private limited companies, the minimum of INR. 1,00,000 is recommended.

Rest capital amount can be injected as and when required. Amount required can be invested into business in the form of share capital, i.e., by issuing additional shares of the company or it can be invested in form of loan, i.e., this amount is required repaid after decided periods of time.

Yes, foreign entities are allowed to open a company in India holding 100% of equity share capital of the Indian Company. Such Indian companies are known as wholly owned subsidiary,

Please note that 100% investment can be made only in sectors where 100% FDI is allowed. Sectors in which 100% FDI is allowed under automatic route, foreign entity may hold 100% equity shares without obtaining any prior approval. Further, where 100% FDI is allowed subject to government approval, foreign entity is first required to obtain government approval.

A foreign company can retain 100% shares hence, yes it is fine to not allow any shares to your Indian resident director.

An Indian entity can collect international investment by following methods:

1. Issuance of Capital Instruments: Under the Companies Act of 2013, a company may issue capital instruments (such as equity shares, debentures, preference shares, and share warrants) to foreign investors and obtain foreign financing. Start-up companies can issue equity or equity linked instruments or debt instruments against receipt of foreign remittance. In addition, Start ups can issue convertible notes to persons resident outside India.
2. External commercial borrowings: External Commercial Borrowings are commercial loans raised by eligible resident entities from recognised non-resident entities. ECD should adhere to guidelines of minimum maturity, permissible and prohibited end uses, maximum all-in-cost ceiling, etc.

A foreign entity have following investment route in India:

1. Automatic Route: Automatic route means the entry route through which investment by a person resident outside India does not require the prior approval of the Reserve Bank of India or the Central Government. Government has specified category of industries covered under the Automatic route.
2. Government Route: ‘Government Route’ means the entry route wherein investment by a person resident outside India requires prior Government approval. Foreign investment received under this route shall be in accordance with the conditions stipulated by the Government in its approval.
3. Automatic Route + Government Rote: This is a hybrid route of investment. Sectors covered under this route do not require any approval to a specified % of investment. E.g. In the air Transport services sector, FDI upto 49% is covered under automatic route. However, Investment made beyond 49% requires prior approval of the government.

In India, domestic companies are liable to pay income tax at rate between 15% to 25% depending upon terms and conditions defined under Income Tax Act. Such as, Companies with turnover or gross receipts exceeding INR 400 Crores are liable to pay income tax @ 25%. Similarly, the government has recently announced a reduction in corporation taxes to 15% for new businesses.

In general, business with aggregate turnover exceeding following threshold limit are required to obtain GST registration:

1. Aggregate turnover exceeds INR 40 lacs, in case of supply of goods, or
2. Aggregate turnover exceeds INR 20 Lacs (All India basis), in case of supply of services.

However, in various situation GST registration is required from day 1 irrespective of aggregate turnover such as Import/Export of goods or services, GST payable under Reverse Charge, Inter-state supply of goods etc.

VAT is an old concept in India and the same was subsumed by Goods and Service Tax (GST) with effect from 1st July, 2017. Therefore, now no VAT registration is required. However, covered entities are required to obtain GST registration.

Please note that there are some industries which are still covered under VAT and required VAT registration such as Petroleum products, natural gas etc.

Generally, a trading company is liable to pay Goods and Service Tax on sale and purchase of goods or services and Income tax on profit earned from the business.

GST is charged between 0% to 28% depending upon category of the goods and service. Further, the company will be entitled to claim credit of GST paid on purchases and services procured.

No. As compared to countries like US and UK the taxes in India are very less. Profit earned in India from business is subject to direct tax, i.e., Income Tax. Further, companies are also liable to pay indirect taxes such as GST, Custom duty, Professional tax etc.

No, the legal representative need not be present to open an bank account in India.

The import and export licenses typically arrive in 3–4 working days subject to availability of documents. Further, as per existing norms, Import and Export code is valid for lifetime. However, any change in particulars furnished at the time of obtaining license should be informed to the department within reasonable time

The import and export licenses typically arrive in 3–4 working days subject to availability of documents. Further, as per existing norms, Import and Export code is valid for lifetime. However, any change in particulars furnished at the time of obtaining license should be informed to the department within reasonable time

The import and export licenses typically arrive in 3–4 working days subject to availability of documents. Further, as per existing norms, Import and Export code is valid for lifetime. However, any change in particulars furnished at the time of obtaining license should be informed to the department within reasonable time