Background:
Over the last 2 decades, there has been a growing demand of the Indian talent pool in the foreign companies all over the world. This has been seen primarily in the service sector, where the demand for the skilled human resource is quite high. To tap this market, many foreign companies and foreign nationals are incorporating Private Companies or LLPs in India. This particular case, where an Indian entity is incorporated as a subsidiary of a foreign company or a foreign national holds shareholding in an Indian entity is treated as a case of foreign direct investment in India and comes under the purview of FDI policy and FEMA Compliances. For incorporating a Private Limited Company, 100% of FDI is allowed under the automatic route and there are no FDI restrictions, barring a few sectors, which require prior approvals from the central government. However, for FDI into LLP, only those specified sectors where 100% FDI is allowed under the automatic route and there are no performance based conditions, are open for FDI.
BraineBox Team can provide assistance in ascertaining whether the particular sector is allowed for 100% FDI by automatic route in case of LLP.
Other types of entities are also open for FDI, however, they require prior RBI approvals. Hence they are not the most preferred forms.
For incorporation of a Company and LLP, click on the below links:
LLP Incorporation
Additional requirements apart from the requirements discussed in the previous sections:
1. In case a subsidiary is to be formed of a foreign company, 99% shares are required to be held by the foreign company and 1% shares are required to be held by a person in beneficial ownership on behalf of the company.
2. Minimum of one Indian Director or Designated Partner, who is also an Indian resident is required. For assessing the residency, tax residency status has to be checked as per the provisions of the Indian Income Tax Act.
3. An Indian address is also required for the purpose of incorporation.
BraineBox Team can provide assistance for the purpose of Nominee Directors and a registered office address in India for the purpose of incorporation.
4. Digital Signatures of Foreign National Directors: Digital signatures are also required to be prepared for the foreign nationals. The following documents and information are required for obtaining Digital Signature for a foreign national:
A. Foreign national is residing in the native country
– If native country is a signatory of Hague Convention: Proof of identity, address proof and photo on DSC application should be notarized by the Public Notary of that foreign country and apostilled by the competent authority of that foreign country.
– If native country is not a signatory of Hague Convention: Proof of identity, address proof and photo on DSC application should be notarized by the Public Notary of that foreign country and consumerized by the competent authority of that foreign country
– Passport copy and application form with Photo (all attested).
B. Foreign national residing in India: The following documents should be certified by Individual’s Embassy
– Resident Permit certificate issued by Assistant Foreigner Regional Registration Officer, an officer of the Bureau of Immigration India.
– Passport
– Visa
– Application form with Photo (attested)
Additional Procedure post Incorporation of the Company or LLP:
1. Remittance of subscription amount in India banks a/c (within 45 days of incorporation) through wire transfer from a foreign country bank account to an Indian bank account.
2. Obtaining FIRC & KYC docs from the Bank.
3. Allotment of shares and issue of share certificates immediately and Reporting in Form FC-GPR within 30 days of the date of allotment.