Company Incorporation with NRIs or Foreign Nationals

Indian Company Registration

Indian Company Registration for NRIs and Foreign Nationals

India is a preferred destination for investment from NRIs, Foreign Nationals and Foreign Companies due to its booming economy and wealth of resources. India is among the fastest growing economies in the world, slated for tremendous growth over the coming decades with plenty of business opportunities. Foreign investment into India is at an all-time high and is pegged to grow even higher with regulatory reforms and an investor friendly climate. In this context, we look at the process and procedure for a NRI or Foreign National or Foreign Company to invest or start, manage and grow a business in India.

Business Registration

NRIs and Foreign Nationals must always choose to invest or start a Private Limited Company or Limited Company in India. Business entities like Private Limited Company and Limited Company only allow for Foreign Direct Investment (FDI) into India under the automatic route. NRIs and Foreign Nationals are not allowed to invest or start a Proprietorship or Partnership or One Person Company in India, while FDI in LLP requires prior approval from the Reserve Bank of India.

Therefore, the most ideal entity for NRIs and Foreign Nationals to invest or start a business in India would be a Private Limited Company. Limited Company can incorporated by the Foreign promoter if the number of investors in the venture would be more than 7 and the company would have to raise equity funds from a number of shareholders. Private Limited Companies can have upto 200 shareholders, while a Limited Company is allowed to have unlimited shareholders. Limited company must also comply with more stringent statutory filing requirements when compared to a Private Limited Company.

Board of Directors

Companies Act, 2013 permits NRIs, PIOs, Foreign Nationals and Foreign Residents to act as a Director of an Indian Company. To become a Director of an Indian Company, the person must fist obtain a Director Identification Number (DIN) after obtaining Digital Signature Certificate. To obtain a Digital Signature Certificate, the foreign national or NRI must submit a self-attested and notarized copy of his/her Passport and an address proof (Drivers License, Utility Bill, Residency Card). Once, the digital signature certificate is obtained, DIN can be obtained for the foreign national or NRI and he/she maybe added to the Board of Directors during incorporation.

A private limited company must have a minimum of two Directors and can have a maximum of seven Directors. It is recommended that atleast one Director be an Indian Citizen and Indian Resident, while the other Board members can be of any nationality or residency.

Shareholding

The shareholding of the Indian Company can be held by a foreign national or foreign entity, subject to the FDI norms in India. Companies Act, 2013 requires that a Private Limited Company have a minimum of two shareholders and a maximum of two hundred shareholders. Since, Reserve Bank of India allows 100% FDI in many of the sectors in India under the automatic route, the process for ownership of shares of an Indian Company by a Foreign National or Foreign Entity is simple.

Procedure for Incorporation

The procedure for Incorporation of a Company with Foreign National or Foreign Entities or NRIs is similar to that of an incorporation of a private limited company with Indian Directors and Indian Shareholders. Notarization of foreign identity proof, address proof and and other documents of foreign origin is one of the additional steps to be complied with while incorporating a company with NRIs or Foreign Entities.

Summary

India is a great destination for starting a new business. With a market of over 1.2 billion people and a roaring economy, India presents numerous business opportunities for persons and businesses of all size and vision. India is also progressing quickly to make the process for incorporation of a company easy and quick. Therefore, there is no better time to invest in India and reap the returns.

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Post by IndiaFilings

IndiaFilings.com is committed to helping entrepreneurs and small business owners start, manage and grow their business with peace of mind at an affordable price. Our aim is to educate the entrepreneur on the legal and regulatory requirements and be a partner throughout the entire business life cycle, offering support to the company at every stage to make sure they are compliant and continually growing.