| • Incorporation of a Company • Setting up Liaison /Representative /Branch/Project Office A foreign company planning to set up business operations in India has the following options to set up a business entity:- 1 As an incorporated entity under the Companies Act 1956 through JVs or wholly owned subsidiaries Incorporation of a Company A private limited company is one that through its Articles restricts the rights to transfer its shares, limits the number of its members to 50, prohibits any invitation to the public to subscribe for any shares in the company and prohibits any invitation or acceptance of deposits from other than its members. A public company is a company, which is not a private company. For registration and incorporation of a company, an application has been filed with Registrar of companies. Application for registration of a company accompanied by the selected names, memorandum of association and articles of association and other necessary documents is to be filed with the Registrar of companies of the State in which the company is proposed to incorporated. The documents required to be filed along with applications are as follows: – A. Memorandum of Association Upon compliance with all requirements, the Registrar will register the company and issue a certificate of incorporation of company that would bring the company into existence as a legal entity. Once the company has been duly registered and incorporated as an Indian company, it is subject to Indian laws and regulations as applicable to other domestic Indian companies. For further details please visit the website of Ministry of Company Affairs http://www.mca.gov.in/ Setting up Liaison /Representative /Branch/Project Office A Liaison Office could be established with the approval of Reserve Bank of India. The role of Liaison Office is limited to collection of information, promotion of exports/imports and facilitate technical/financial collaborations. Liaison office cannot undertake any commercial activity directly or indirectly. Project Office Foreign companies planning to execute specific projects in India can set up a temporary project/site offices in India for carrying out activities only relating to that project. RBI has now granted general permission to foreign entities to establish project offices subject to specified conditions. Branch Office Foreign companies engaged in manufacturing and trading activities abroad are allowed to set up branch offices in India for the purposes of export/import of goods, rendering professional or consultancies services, R&D, promoting technical or financial collaborations, representing the parent company, acting as buying/selling agents, rendering services in IT and development of software, rendering technical support to the products supplied by the parent/group companies, foreign airline/shipping companies. Branch offices could be established with the approval of RBI and may remit outside India profit of the branch, subject to RBI guidelines after payment of applicable Indian taxes. Procedure for establishing Liaison Office/Project Office/Branch Office Application for setting up these offices may be submitted to Chief General Manger, Exchange Control Department (Foreign Investment Division), RBI, Central Office, Mumbai in Form FNC-I. Website of Foreign Exchange management Department, RBI http://www.rbi.org.in/scripts/Fema.aspx Foreign Exchange Management (Establishment in India of branch or office or other place of business) Regulations, 2000http://www.rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=176 Foreign Exchange Management (Establishment in India of branch or office or other place of business) (Amendment) Regulations, 2003 http://www.rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=1416 Foreign Exchange Management (Establishment in India of branch or office or other place of business) (Second Amendment) Regulations, 2003 http://www.rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=1450 Foreign Exchange Management (Establishment in India of Branch or Office or Other Place of Business) (Amendment) Regulations, 2005 http://www.rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=2469 Form FNC-I for opening a Branch/Project/Liaison Office Exchange Control manual of RBI Foreign Exchange Management Act 1999 |