A foreign company is any company or body corporate incorporated outside India which, has a place of business in India whether by itself or through an agent, physically or through electronic mode and conducts any business activity in India in any other manner. Section, 379 to 393 deal with Foreign Companies under Companies Act, 2013. A foreign company can establish its place of business in India by filing Form FC-1 with the Ministry of Corporate Affairs, Government of India.
Who shall register a Foreign Company: A foreign entity may establish a Branch Office or Liasion Office or Project Office or any other place of business in India by registering it as Foreign Company under the Companies Act, 2013.
RBI Approval is mandaotry for establishment of branch office or liaison office or project office or any other place of business in India by foreign entities. It is regulated in terms of Section 6(6) of Foreign Exchange Management Act, 1999.
Applications from foreign companies (a body corporate incorporated outside India, including a firm or other association of individuals) for establishing Branch Office/ Liasion Office/ Project Office in India shall be considered by the AD Category-I bank as per the guidelines given by Reserve Bank of India (RBI).
An application from a person resident outside India for opening of a Branch Office/ Liasion Office/ Project Office in India shall require prior approval of Reserve Bank of India and shall be forwarded by the AD Category-I bank to the General Manager, Reserve Bank of India, Central Office Cell, Foreign Exchange Department, 6, Sansad Marg, New Delhi - 110 001.
The non-resident entity applying for a Branch Office/ Liasion Office in India should have a financially sound track record ie.
A profit making track record during the immediately preceding five financial years in the home country and net worth of not less than USD 100,000 or its equivalent.
Net Worth [total of paid-up capital and free reserves, less intangible assets as per the latest Audited Balance Sheet or Account Statement certified by a Certified Public Accountant or any Registered Accounts Practitioner by whatever name called].
A profit making track record during the immediately preceding three financial years in the home country and net worth of not less than USD 50,000 or its equivalent.
An applicant that is not financially sound and is a subsidiary of another company may submit a Letter of Comfort (LOC) from its parent/ group company, subject to the condition that the parent/ group company satisfies the prescribed criteria for net worth and profit.
First, it has to get RBI approval and then setup Branch Office or Liasion Office or Project Office in India and then submit application for Registration as Foreign Company with the Ministry of Corporate Affairs, Governemnt of India.
The application for establishing Branch Office/ Liasion Office/ Project Office in India may be submitted by the non-resident entity in Form FNC to a designated AD Category - I bank (i.e. an AD Category – I bank identified by the applicant with whom they intend to pursue banking relations) along with the prescribed documents mentioned in the Form and the Letter of Comfort (LOC), wherever applicable. The AD Category-I bank shall after exercising due diligence in respect of the applicant’s background, and satisfying itself as regards adherence to the eligibility criteria for establishing Branch Office/ Liasion Office/ Project Office, antecedents of the promoter, nature and location of activity of the applicant, sources of funds and compliance with the extant KYC norms grant approval to the foreign entity for establishing Branch Office/ Liasion Office/ Project Office in India. The AD Category-I banks may frame appropriate policy for dealing with these applications in conformity with the FEMA Regulations and Directions.
However, before issuing the approval letter to the applicant, the AD Category-I bank shall forward a copy of the Form FNC along with the details of the approval proposed to be granted by it to the General Manager, Reserve Bank of India, CO Cell, New Delhi, for allotment of Unique Identification Number (UIN) to each Branch Office/ Liasion Office. After receipt of the UIN from the Reserve Bank, the AD Category-I bank shall issue the approval letter to the non-resident entity for establishing Branch Office/ Liasion Office in India.
There is a general permission to non-resident companies to establish Project Offices in India, provided they have secured a contract from an Indian company to execute a project in India. Also, the project must have secured the necessary regulatory clearances; andis funded directly by inward remittance from abroad; or the project is funded by a bilateral or multilateral International Financing Agency, or a company or entity in India awarding the contract has been granted Term Loan by a Public Financial Institution or a bank in India for the Project.
The approval granted by the AD Category I bank should include a proviso to the effect that in case the Branch Office/ Liasion Office/ Project Office for which approval has been granted is not opened within six months from the date of the approval letter, the approval shall lapse. In cases where the non-resident entity is not able to open the office within the stipulated time frame due to reasons beyond its control, the AD Category-I bank may consider granting extension of time for a further period of six months for setting up the office. Any further extension of time shall require the prior approval of Reserve Bank of India in this regard.
A Branch Office/ Liasion Office/ Project Office or any other place of business by whatever name called is required to register with the Registrar of Companies (ROCs) once it establishes a place of business in India if such registration is required under the Companies Act, 2013.
Every foreign company shall, within thirty days of the establishment of its place of business in India, deliver to the Registrar for registration:
Applicants from Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong, Macau or Pakistan desirous of opening Branch Office/ Liasion Office/ Project Office in India shall have to register with the state police authorities. Copy of approval letter for ‘persons’ from these countries shall be marked by the AD Category-I bank to the Ministry of Home Affairs, Internal Security Division-I, Government of India, New Delhi for necessary action and record.
Congratulations!! on registering your new business venture. Most of the enterprenuers do not know what next once the Company is registered. You can find below the other mandatory registratons and statutory compliance requirements of a Company.
GST registration is Mandatory if you are a Taxable dealer in sale of Goods or supply of Services.
Import Export Code (IEC) is required to be taken if you deal in Import or Export of Goods of Services.
If your business deals in Food, Catering, Hotel & Restaurant, you need to apply for Food License with Food Safety and Standards Authority of India.
If you want to protect your business name, brand, literary work, invention, you need to apply for Trade Mark, Copyright, Patent respectively with the department of Intellectural Properties of India.
Professional Tax is Mandatory for the Companies registered in India. For all states it is not mandatory and infact only for 17 states it is mandatory.
Shops & Establishments registration is mandatory to register with the concerned State Labour Department.
The new company has to apply for Local Trade License with the Local Municipality or Municipal Corporation.
If your Company is covered under PF Act, you need to get the PF Registration. Now MCA is giving PF Registration along with Incorporation, you need not required to apply again separately, you need to enrol the employees once the threshold limit crosses.
If your Company is covered under ESI Act, you need to get the ESI Registration. Now MCA is giving ESI Registration along with Incorporation, you need not required to apply again separately, you need to enrol the employees once the threshold limit crosses.
You need to appoint a First Auditor of the Company with in 30 days from the date of Incorpration and file Form ADT-1 with MCA with in 15 days of appointment otherwise a maximum penalty of Rs. 3,900/- will be payable.
You need to declare the deposit of Share Capital amount in Form INC-20A with the MCA with in 180 days of Incorporation, otherwise MCA will strikeoff your Company. Few banks also insists you to file this Form otherwise they will not activate your Company's Current Account.
Every Director who has been allotted DIN on or before the end of the financial year, and whose DIN status is 'Approved', would be mandatorily required to file form DIR-3 KYC before 30th April of the immediately next financial year. Failure to file attracts a penalty of Rs. 5,000/- per Director and his/her DIN will be deactivated by the MCA.
Every Company has to hold a meeting of it's Board of Directors once in a Quarter.
Every Company has to hold a meeting of it's members called Annual General Meeting on or before 6 month after closure of it's financial year.
Every Company has to file a report called it's Annual Report in Form FC-3 with MCA with in 30 days from the date it's AGM.
Every Company has to file it's Annual Return in Form FC-4 with in 60 days from the date of it's AGM.
Every Company has to file it's Income Tax Return in form ITR-6 on or before 30th September of each year.
Every Company which is subject to file TDS returns has to file it with in Due date to avoid penalty.
Every Company has to file it's Monthly PT Return with in due date to avoid penalties.
Any Company which subject to file GST returns on QRMS basis has to file with in due date to avoid penalties.
Branch Office or Liasion Office has to submint Annual Activity Certificate (AAC) with AD Category -I bank as well as Director General of Income Tax (International Taxation), New Delhi whereas the Project Office needs to submit the AAC only to the designated AD Category-I bank.
DIN stands for Director Identification Number. Every Director of the company will get this unique Director Identification Number subsequent upon the Company Incorporation. With this DIN, he/she can register any number of companies.
A DIN holder has to file his KYC with MCA every year on or before 30th day of September otherwise a penalty of Rs. 5000/- will be imposed.
DSC stands for Digital Signature Certificate. Class-III Digital Signature Certificate is required for each Shareholder while registering his/her company.
There are different companies who issue Class-III DSCs. These companies are called DSC Certifying Authorities. We have associated with eMudhra Tamil Nadu. eMudhra is one of the largest Digital Signature Certifying Authority in India.
An authorized share capital is a share capital amount upto which the shareholders can invest in equity of the company.infact, this the permission limit to invest amount into Equity Sharecapital.
Paid up share capital is an amount, which is deposited by the shareholders of the compnay in company's bank account towards share capital.
An FCRN is a Foreign Company Registration Number.
It may take 30 days time.
Rs. 6000/- plus stamp duty. Stamp Duty varies from sate to state in India.
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