Setting up a new business is a challenging proposition as it involves various legal formalities and approvals from different government agencies. Yet, every new business always helps in lifting the economy by increasing revenue and job opportunities. As per a report IBEF in 2018, India is the land of technology-led startups, ranking 4th across the world. The industry was evaluates at US$ 35 billion in FY18. Since, it is one of the largest growing economies in the world many global enterprises are planning to set up their offices in India. However, they should seek expert legal advice to understand the mandatory requirements while registering their business in India. Let’s understand the fundamental steps through the article below.
As an Indian Company-
- Limited Liability Company- The companies can be registered as an LLP under the Companies Act, 2013 in India by Ministry of Corporate Affairs (MCA). The mandatory requirements include minimum two directors, two shareholders and 15 days to complete the registration process. A LLC can execute all the commercial activities on behalf of its parent company in India. Additionally, it can also generate revenue and hire employees on the company’s role for the Indian office.
- Limited Liability partnership- It is the easiest and fastest way to set up a foreign company in India. It is a legal entity which is discreet from its shareholders and members. To set up a LLP in India, minimum two shareholders are required who can hold upto 99.9 percent of the company’s shares, hire employees, buy property, borrow funds, as well as take legal actions against any issue on behalf of the foreign entity.
- Joint venture with an Indian company as a partner- Joint Venture is a mutually agrees partnership between two or more companies to work together on a common project which may include a product or service. This is one of the most popular ways of setting up a company in India for the sectors not having 100% FDI.
As a foreign entity-
- Liaison Office- Referred as a Representative office, the Liaison office acts as a communication channel between the parent company and Indian entities. It can promote the parent company’s interest in India however cannot make any money in India. All the costs are borne by the internal funds. It usually takes 45 days to register a LO and get approve by RBI & MCA.
- Branch Office- A BO is an extension of foreign company in India. It can conduct research and commercial activities, provide consultancy support and services offered by parent company in India. Usually the registration is done by RBI & MCA in 45 days.
- Project Office- A project office is majorly set up to carry out a specific project or specific work co-fund by international financial institutions in India. The project needs approval by an Authorized Dealer Bank and doesn’t need any prior approval by RBI. The project office needs to be closed after the completion of project.
How much time is required to start a new Company in India
Currently, it takes 15-20 days to complete the registration process and start your company in India. However, as per a January 2020 Economics Time report, the central government came up with the proposition to reduce the requirement of launching a new business from 10 processes and 18 days to just five processes and as many days. The major ten services including name reservation, incorporation, and registration of various taxes such as GST etc. will only need two forms instead of multiple forms required at present. The two new forms- “Spice Plus & Agile Pro” will be replacing the current six forms. Additionally, these two new forms will also provide access to PAN, TAN, ESIC, EPFO, GSTIN, bank accounts, DIN, and professional tax. These forms will be easily available online for quick access.
Acquire Digital Signature Certificate (DSC)
The Digital Signature Certificate is an electronic key issues by the Ministry of Corporate Affairs, validating the identity of this certificate holder. Fill the application from on the website and submit it with copies of mandatory documents including identity proof, and permanent address proof. It should be submit by the company directors on the MCA website.
Acquire Direct Identification Number (DIN)
Director Identification Number (DIN) is a special identification number is provide to the potential or existing directors of the company in the process of incorporation. It can be obtaines by filling the DIN-1 application form online along with identity and permanent address proof. Further, a print and attest version of the form, as well as the copy of other documents should also be forward to MCA for approval. The permanent DIN is issues after the verification of documents and approval of request.
Create an account on MCA portal- New user registration @mca.gov.in
To create an account on MCA portal, please follow the steps mentioned below:
- Go to the home page of MCA website.
- Click register and fill in the mandatory details.
- Create login id and password
- Enter the User ID & password
- Select DSC registered while completing user registration
- Select the applicable category
- Click submit button to login
Infotax is a leading online finance and tax consultancy providing complete guidance and end-to-end management of all the legal paperwork and compliances related to set up your company or its subsidiary in India. We provide end to end guidance and expert advice so that you can focus on your business while we set up your company smoothly in India.
- Complete consultation on entry strategy and setting up business structure in India
- Identify and assist in selecting the best location for setting up a business
- Incorporation of the company/branch/liaison office in India
- Opening the bank account
- Assist in completing legal formalities
- Obtain necessary approvals from various regulatory authorities and agencies
- Maintenance of accounts and payrolls
Compliance formality with RBI/FEMA for carrying out fund transfers
