companyformation

Form a Private limited  Company in India- minimum share capital=Rs 1 lakh and 2 directors, in just 10 working days-

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Procedure of Company Formation (Private Limited Company), in India.

Step by step guide to Formation/Registration/Incorporation of a Private Limited Company, in India.


Minimum requirements for the Private Limited Company

  • Minimum 2 Directors
  • Minimum 2 Shareholders
  • The directors and shareholders can be the same person
  • Minimum Share Capital shall be Rs. 100,000 (INR One Lac)
  • DIN (Director Identification Number) for all the Directors
  • DSC (Digital Signature Certificate) for one of the Directors

What are the Requirements for a Private Limited Company?

A Registered Business Name: This must be followed by the word ‘Limited' or ‘Ltd'. The Companies Registration Office exercises some control over the choice of name, it cannot be identical (or very similar to) the name of an existing company. It won't be considered if it is offensive or illegal and the use of certain words in a company (for example, `Institute', `National') can only be used in certain circumstances. The company name must be displayed in a conspicuous place at every office, or other premises where the company carries out business. 


A Registered Office: This need not necessarily be the same address as the business is conducted from. Quite frequently the address used for the registered office is that of the firm's solicitor or accountant. This is the address, through, where all official correspondence will go. 


Shareholders: There must be a minimum of two shareholders (also described as `members' or `subscribers'). A private company can have up to fifty shareholders. 


Share Capital: The company must be formed with a stated, nominal share capital divided into shares of fixed amounts. Small companies are frequently formed with a nominal share capital of Rs.100. 

Memorandum of Association: The memorandum is the company's charter. It states the company's name; the situation of its registered office; its share capital; the fact that liability is limited and, most importantly, the object for which the company has been formed. In theory, the company can only operate in the areas mentioned in the objects clause but in practice the clause is drawn to cover as wide an area as possible, and anyway a 75 per cent majority of the members of the company can change the objects whenever they like. Nevertheless, it is worth bearing in mind that directors of the company will incur personal liability if the company engages in a type of business which is not authorised by the objects clause. The memorandum must be signed by at least three shareholders. 


Articles of Association: The document contains the internal regulations of the company, the relationship of the company to its shareholders and the relationship between the individual shareholders. Many companies don't bother to draw up their own articles but adopt (sometimes with some modifications) articles set out in the Companies Act. 


Certificate of Incorporation: This is the document, which the registrar of companies issues to you once he has approved your choice of name and your memorandum. When you receive this document your company legally exists and is ready to trade. 


Auditors: Every company must appoint a qualified auditor. The auditor's duty is to report to the treasurer whether or not the books of the company have been properly kept, and that the balance sheet and profit and loss account presents (or doesn't present) a true and fair view of the company's affairs and complies with the Companies Act. Auditors are appointed or re-appointed at general meetings at which annual accounts are presented, and they hold office from the conclusion of the meeting until the next general meeting. 


Accounts: The Companies Act lays down strict rules on accounting. Every company must maintain a set of records, which show the financial position at any one time with reasonable accuracy. The accounts comprise a profit and loss account and balance sheet with the auditors' and directors' reports appended. A new company's accounting reference period begins on its incorporation and runs until the following 31st March - unless the company notifies the registrar of companies otherwise. Within ten months of the end of an accounting reference period, an audited set of accounts must be laid before the shareholders at a general meeting and a set delivered to the registrar of companies. 


Registers, etc.: In addition to the accounts books, companies are required to have: a register of members and share ledger; a register of directors and secretaries; a register of share transfers; a register of charges; a register of debenture holders; a book can be purchased to hold all of the above. This will be provided automatically if you buy a running concern. 


Company Seal: All companies must have an engraved seal. This must be impressed on share certificates and must be used whenever the company has to execute a deed. Again, this is included in the ready-made company package.

1. What are the forms in which business can be conducted by a foreign company in India?

A foreign company planning to set up business operations in India has the following options:

  • As an incorporated entity by incorporating a company under the Companies Act, 1956 through
  • Joint ventures; or
  • Wholly owned subsidiaries
  • As an office of a foreign entity through
  • Liaison Office / Representative Office
  • Project Office
  • Branch Office

Such offices can undertake activities permitted under the Foreign Exchange Management (Establishment in India of Branch Office or other place of business) Regulations, 2000.

2. How does a foreign company invest in India? What are the regulations pertaining to issue of shares by Indian companies to foreign collaborators/investors?

Automatic Route

FDI up to 100% is allowed under the automatic route in all activities/sectors except the following which require prior approval of the government:

  • i) where provisions of Press Note 1 (2005 Series) issued by the Government of India are attracted.
  • ii) where more than 24% foreign equity is proposed to be inducted for manufacture of items reserved for the Small Scale sector.
  • iii) FDI in sectors/activities to the extent permitted under Automatic Route does not require any prior approval either by the government or the Reserve Bank of India [Get Quote].
  • iv) The investors are only required to notify the Regional Office concerned of the Reserve Bank of India within 30 days of receipt of inward remittances and file the required documents along with form FC-GPR with that Office within 30 days of issue of shares to the non-resident investors.

Government Route

FDI in activities not covered under the automatic route requires prior Government approval and are considered by the Foreign Investment Promotion Board (FIPB), Ministry of Finance. Application can be made in Form FC-IL, which can be downloaded from www.dipp.gov.in. Plain paper applications carrying all relevant details are also accepted. No fee is payable.

General permission of RBI under FEMA

Indian companies having foreign investment approval through FIPB route do not require any further clearance from the Reserve Bank of India for receiving inward remittance and issue of shares to the non-resident investors. The companies are required to notify the concerned regional office of the Reserve Bank of India of receipt of inward remittances within 30 days of such receipt and submit form FC-GPR within 30 days of issue of shares to the non-resident investors.

3. Which are the sectors where FDI is not allowed in India, under the Automatic Route as well as Government Route?

FDI is prohibited under Government as well as Automatic Route for the following sectors:

  • i) Retail Trading (except single brand product retailing)
  • ii) Atomic Energy
  • iii) Lottery Business
  • iv) Gambling and Betting
  • v) Business of Chit Fund
  • vi) Nidhi Company
  • vii) Agricultural or plantation activities (cf Notification No. FEMA 94/2003-RB dated June 18, 2003).
  • viii) Housing and real estate business (except development of townships, construction of residential/commercial premises, roads or bridges to the extent specified in Notification No. FEMA 136/2005-RB dated July 19, 2005 )
  • ix) Trading in Transferable Development Rights (TDRs).

4. What should be done after investment is made under the Automatic Route or with Government approval?

A two-stage reporting procedure has been introduced for this purpose.

  • On receipt of money for investment:
  • Within 30 days of receipt of money from the non-resident investor, the Indian company will report to the regional office of the Reserve Bank of India, under whose jurisdiction its registered office is located, containing details such as:
  • Name and address of the foreign investor/s
  • Date of receipt of funds and their rupee equivalent
  • Name and address of the authorised dealer through whom the funds have been received, and
  • Details of the Government approval, if any.
  • Upon issue of shares to non-resident investors:
  • Within 30 days from the date of issue of shares, a report in Form FC-GPR, PART A together with the following documents should be filed with the concerned regional office of the Reserve Bank of India.
  • Certificate from the company secretary of the company accepting investment from persons resident outside India certifying that;
  • The company has complied with the procedure for issue of shares as laid down under the FDI scheme as indicated in the notification no. FEMA 20/2000-RB dated 3rd May 2000 as amended from time to time
  • The proposal is within the sectoral policy / cap permissible under the automatic route of RBI and it fulfills all the conditions laid down for investments under the Automatic approval route namely

a) Non-resident entity/ies (other than individuals) to whom it has issued shares does / do not have any existing joint venture or technology transfer or trade mark agreement in India in the same field.

b) The company is not investing in an SSI unit & the investment limit of 24 % has been observed/ requisite approvals have been obtained.

c) Shares have been issued on rights basis and the shares are issued to non-residents at a price that is not lower than that at which shares are/were issued to residents.

OR

d) Shares issued are bonus shares.

OR

e) Shares have been issued under a scheme of merger and amalgamation of two or more Indian companies or reconstruction by way of demerger or otherwise of an Indian company, duly approved by a court in India.

  • Shares have been issued in terms of SIA/FIPB approval No. --------------------- dated --------------------
  • Certificate from statutory auditors or chartered accountant indicating the manner of arriving at the price of the shares issued to the persons resident outside India.

5. What are the guidelines for transfer of existing shares from non-residents to residents or residents to non-residents?

Transfer from Non-Resident to Resident:

The term 'transfer' is defined under FEMA as including "sale, purchase, acquisition, mortgage, pledge, gift, loan or any other form of transfer of right, possession or lien."

The FEMA Regulations give specific permission covering the following forms of transfer i.e. transfer by way of sale and gift. These permissions are discussed below:

A: Transfer by way of sale:

A person resident outside India can freely transfer share/convertible debenture by way of sale to a person resident in India as under:

  • Any person resident outside India (other than NRIs/OCBs) can transfer by way of sale the shares/convertible debentures to any person resident outside India; subject to the condition that the acquirer or transferee does not have any previous venture or tie up in India in the same field or sector.
  • A non-resident Indian (NRI) or an erstwhile Overseas Corporate Body may transfer by way of sale, the shares/convertible debentures held by him to another NRI only.
  • Any person resident outside India may sell share/convertible debenture acquired in accordance with FEMA Regulations, on a recognized Stock Exchange in India through a registered broker.

B: Transfer by way of Gift:

A person resident outside India can freely transfer share/convertible debenture by way of gift to a person resident in India as under:

  • Any person resident outside India, (not being a non-resident Indian or an erstwhile overseas corporate body), can transfer by way of gift the shares/convertible debentures to any person resident outside India; subject to the condition that the acquirer or transferee does not have any previous venture or tie up in India in the same field or sector.
  • A non-resident Indian (NRI) may transfer by way of gift, the shares/convertible debentures held by him to another NRI only.
  • Any person resident outside India may transfer share/convertible debenture to a person resident in India by way of gift.

Transfer from Resident to Non-Resident:

A: Transfer by way of sale - General Permission under Regulation 10 of Notification No. FEMA 20/2000-RB dated May 3, 2000.

  • A person resident in India may transfer to a person resident outside India any share/convertible debenture of an Indian company whose activities fall under the Automatic Route for FDI subject to the sectoral limits, by way of sale subject to complying with pricing guidelines, documentation and reporting requirements for such transfers, as may be specified by the Reserve Bank of India, from time to time.

This general permission is not available where:

  • Indian company whose shares or convertible debentures are proposed to be transferred is in financial service sector (financial services sector means service rendered by banking and non-banking companies regulated by the Reserve Bank, insurance companies regulated by Insurance Regulatory and Development Authority (IRDA) and other companies regulated by any other financial regulator, as the case may be).
  • The transfer falls within the provisions of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

B: Transfer by way of gift:

  • A person resident in India can transfer by way of gift shares to a person resident outside India in the following ways:

A person resident in India who proposes to transfer to a person resident outside India [other than erstwhile OCBs] any security, by way of gift, shall make an application to the central office of the foreign exchange department, Reserve Bank of India furnishing the following information, namely:

  • Name and address of the transferor and the proposed transferee
  • Relationship between the transferor and the proposed transferee
  • Reasons for making the gift. The gifts are permissible up to a limit of:

(i) 5% of the paid up capital of the company per donee, and

(ii) Amount does not exceed $25,000 per calendar year for each donor. The valuation of these shares shall be in accordance with pricing guidelines prescribed.

6. What if the transfer from resident to non-resident does not fall under the above facility?

In case the transfer does not fit into any of the above, either the transferor (resident) or the transferee (non-resident) can make an application for the Reserve Bank's permission for the transfer. The application has to be accompanied with the following documents:

  • A copy of FIPB approval (if required).
  • Consent letter from transferor and transferee clearly indicating the number of shares, name of the investee company and the price at which the transfer is proposed to be effected.
  • The present/post transfer shareholding pattern of the Indian investee company showing the equity participation by residents and non-residents category-wise.
  • Copies of the Reserve Bank of India's approvals/acknowledged copies of FC-GPR evidencing the existing holdings of the non-residents.
  • If the sellers/transferors are NRIs / OCBs, the copies of the Reserve Bank of India's approvals evidencing the shares held by them on repatriation / non-repatriation basis.
  • Open Offer document filed with SEBI if the acquisition of shares by non-resident is under SEBI Takeover Regulations.
  • Fair valuation certificate from chartered accountant indicating the value of shares as per the following guideline.
  • In the case of unlisted shares the fair value is worked out as per the erstwhile Controller of Capital Issue/s.
  • For listed shares, the price worked out is not less than the higher of average weekly high and low quotations for 6 months and average of daily high and low quotation or two weeks preceding 30 days prior to the date of making application to FIPB.

7. Are the investments and profits earned in India repatriable?

All foreign investments are freely repatriable except for the cases where NRIs choose to invest specifically under non-repatriable schemes. Dividends declared on foreign investments can be remitted freely through an Authorised Dealer.

8. What are the guidelines on issue and valuation of shares in case of existing companies?

  • Allotment of shares on preferential basis shall be as per the requirements of the Companies Act, 1956, which will require special resolution in case of a public limited company.
  • In case of listed companies, valuation shall be as per the Reserve Bank of India /SEBI guidelines as follows:
  • The issue price shall be either at:

i) The average of the weekly high and low of the closing prices of the related shares quoted on the stock exchange during the six months preceding the relevant date or

ii) The average of the weekly high and low of the closing prices of the related shares quoted on the stock exchange during the two weeks preceding the relevant date.

  • In case of unlisted companies, valuation shall be done in accordance with the guidelines issued by the erstwhile Controller of Capital Issues.

9. What are the regulations pertaining to issue of ADRs/GDRs by Indian companies?

  • Indian companies are allowed to raise capital in the international market through the issue of ADRs/GDRs. They can issue ADRs/GDRs without obtaining prior approval from RBI if it is eligible to issue ADRs/GDRs in terms of the Scheme for Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and subsequent guidelines issued by ministry of finance, government of India.
  • After the issue of ADRs/GDRs, the company has to file a return in the proforma given in Annexure 'C' to the RBI Notification No.FEMA.20/ 2000-RB dated May 3, 2000. The company is also required to file a quarterly return in a form specified in Annexure 'D' of the same regulations.
  • There are no end-use restrictions on GDR/ADR issue proceeds, except for an express ban on investment in real estate and stock markets.

10. What is meant by Sponsored ADR & Two-way fungibility Scheme of ADR/GDR?

  • Sponsored ADR/GDR: An Indian company may sponsor an issue of ADR/GDR with an overseas depository against shares held by its shareholders at a price to be determined by the Lead Manager. The Operative guidelines for the same have been issued vide A.P. (DIR Series) Circular No.52 dated November 23, 2002.
  • Two-way fungibility Scheme: Under the limited Two-way fungibility Scheme, a registered broker in India can purchase shares of an Indian company on behalf of a person resident outside India for the purpose of converting the shares so purchased into ADRs/GDRs. The operative guidelines for the same have been issued vide A.P. (DIR Series) Circular No.21 dated February 13, 2002. The Scheme provides for purchase and re-conversion of only as many shares into ADRs/GDRs which are equal to or less than the number of shares emerging on surrender of ADRs/GDRs which have been actually sold in the market. Thus, it is only a limited two-way fungibility wherein the headroom available for fresh purchase of shares from domestic market is restricted to the number of converted shares sold in the domestic market by non-resident investors. So long ADRs/GDRs are quoted at discounts to the value of shares in domestic market, an investor will gain by converting the ADRs/GDRs into underlying shares and selling them in the domestic market. In case of ADRs/GDRs being quoted at premium, there will be demand for reverse fungibility, i.e. purchase of shares in domestic market for re-conversion into ADRs/GDRs. The scheme is operationalised through the Custodians of securities and stockbrokers under SEBI.

11. Can Indian companies issue Foreign Currency Convertible Bonds (FCCBs)?

  • FCCBs can be issued by Indian companies in the overseas market in accordance with Scheme for Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993.
  • The FCCB issue needs to conform to External Commercial Borrowing Guidelines, issued by RBI vide Notification No. FEMA 3/2000-RB dated May 3, 2000 as amended from time to time.

12. Can I invest through Preference Shares? What are the regulations applicable in case of such investments?

  • Foreign investment through preference shares is treated as foreign direct investment. Foreign investment in preference share is considered as part of share capital and fall outside the external commercial borrowing (ECB) guidelines/cap.
  • Preference shares to be treated as foreign direct equity for purpose of sectoral caps on foreign equity, where such caps are prescribed, provided they carry a conversion option. If the preference shares are structured without such conversion option, they would fall outside the foreign direct equity cap.

13. Can shares be issued against Lumpsum Fee, Royalty and ECB?

Issue of equity shares against lump sum fee, royalty and external commercial borrowings (ECBs) in convertible foreign currency are permitted, subject to meeting all applicable tax liabilities and sector specific guidelines.

14. Other than issue of shares under Automatic /Government Route, what other general permissions are available under RBI Notification No.FEMA 20 dt.3-5-2000?

  • Issue of shares under ESOP by Indian companies to its employees or employees of its joint venture or wholly owned subsidiary abroad who are resident outside India directly or through a Trust up to 5% of the paid up capital of the company.
  • Issue and acquisition of shares by non-residents after merger or de-merger or amalgamation of Indian companies.
  • Issue shares or preference shares or convertible debentures on rights basis by an Indian company to a person resident outside India.

15. Can I invest in unlisted shares issued by a company in India?

Yes. As per the regulations/guidelines issued by the Reserve Bank of India/Government of India, investment can be made in unlisted shares of Indian companies.

16. Can a foreigner set up a partnership/proprietorship concern in India?

No. Only NRIs/PIOs are allowed to set up partnership/proprietorship concerns in India. Even for NRIs/PIOs investment is allowed only on non-repatriation basis.

17. Can I invest in Rights shares issued by an Indian company at a discount?

There are no restrictions under FEMA for investment in Rights shares at a discount, provided the rights shares so issued are being offered at the same price to residents and non-residents.

II - Foreign Technical Collaboration

1. What are the payment parameters for foreign technology transfer under the Automatic Route of Reserve Bank of India? How should royalty be calculated?

  • Payment for foreign technology collaboration by Indian companies are allowed under the automatic route subject to the following limits:
  • Lump sum payments not exceeding US$ 2 million.
  • Royalty payable being limited to 5 per cent for domestic sales and 8 per cent for exports, without any restriction on the duration of the royalty payments.
  • The royalty limits are net of taxes and are calculated according to standard conditions.
  • The royalty will be calculated on the basis of the net ex-factory sale price of the product, exclusive of excise duties, minus the cost of the standard bought-out components and the landed cost of imported components, irrespective of the source of procurement, including ocean freight, insurance, custom duties, etc.
  • RBI has delegated the powers to ADs to make payment of royalty under such agreements. The requirement of registration of the agreement with the Regional Office of Reserve Bank of India has been done away with.

2. What should be done, if Automatic Route of Reserve Bank of India for technology transfer is not available?

Proposals, which do not satisfy the parameters prescribed for automatic route of RBI, require clearance from Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India.

III -- Foreign Portfolio Investment

1. What are the regulations regarding Portfolio Investments by Foreign Institutional Investors (FIIs)?

  • Investment by FIIs is regulated under SEBI (FII) Regulations, 1995 and Regulation 5(2) of FEMA Notification No.20 dated May 3, 2000. FIIs include asset management companies, pension funds, mutual funds, and investment trusts as nominee companies, incorporated / institutional portfolio managers or their power of attorney holders, university funds, endowment foundations, charitable trusts and charitable societies.
  • SEBI acts as the nodal point in the registration of FIIs. The Reserve Bank of India has granted general permission to SEBI-registered FIIs to invest in India under the Portfolio Investment Scheme (PIS).
  • Investment by individual FIIs cannot exceed 10% of paid up capital. Investment by foreign registered as sub accounts of FII cannot exceed 5% of paid up capital. All FIIs and their sub-accounts taken together cannot acquire more than 24% of the paid up capital of an Indian company. An Indian company can raise the 24% ceiling to the sectoral cap / statutory ceiling, as applicable, by passing a resolution by its board of directors followed by passing a special resolution to that effect by their general body.

2. What are the regulations regarding Portfolio Investments by NRIs/PIOs?

  • Non Resident Indian (NRIs) and Persons of Indian Origin (PIOs) can purchase/sell shares/convertible debentures of Indian companies on stock exchanges under Portfolio Investment Scheme. For this purpose, the NRI/PIO has to apply to a designated branch of a bank, which deals in Portfolio Investment. All sale/purchase transactions are to be routed through the designated branch.
  • An NRI or a PIO can purchase shares up to 5% of the paid up capital of an Indian company. All NRIs/PIOs taken together cannot purchase more than 10% of the paid up value of the company. (This limit can be increased by the Indian company to 24% by passing a General Body resolution).
  • The sale proceeds of the repatriable investments can be credited to the NRE/NRO etc. accounts of the NRI/PIO whereas the sale proceeds of non-repatriable investment can be credited only to NRO accounts.
  • The sale of shares will be subject to payment of applicable taxes.

IV - Investment in Government Securities and Corporate debt

1. Can a Non-resident Indian invest in Government Securities/Treasury bills and Corporate debt?

Under the FEMA Regulations only NRIs and SEBI registered FIIs are permitted to purchase Government Securities/Treasury bills and Corporate debt. The details are as under;

A. A Non-resident Indian can purchase,

(1) i) Government dated securities (other than bearer securities) or treasury bills or

units of domestic mutual funds;

ii) bonds issued by a public sector undertaking(PSU) in India;

iii) shares in Public Sector Enterprises being disinvested by the Government of India.

(2) They can also invest, on non-repatriation basis, in dated Government securities (other than bearer securities), treasury bills, units of domestic mutual funds, units of Money Market Mutual Funds in India, or National Plan/Savings Certificates on non-repatriation basis. The guidelines for these schemes are framed by the concerned Government agencies.

B. A SEBI registered Foreign Institutional Investor may purchase, on repatriation basis, dated Government securities/treasury bills, non-convertible debentures/bonds issued by an Indian company and units of domestic mutual funds either directly from the issuer of such securities or through a registered stock broker on a recognised stock exchange in India. The FIIs is required to ensure that;

i) the FII allocation of its total investment between equity and debt instruments (including dated Government Securities and Treasury Bills in the Indian capital market) should not exceed the ratio of 70:30.

ii) In case the FII is set-up as a 100% debt FII, it can invest the entire corpus in dated Government Securities including Treasury Bills, non-convertible debentures/bonds issued by an Indian company subject to limits, if any, stipulated by SEBI in this regard.

The Investment in Government Securities/Treasury bills and Corporate debt is subject to a ceiling decided in consultation with the Government of India. Investment limit for the FIIs as a group in Government securities currently is USD 3.2 Billion. The limit for investment in Corporate debt is USD 1.5 billion. At present, the FIIs can also invest in Innovative instruments such as Upper Tier-II capital upto a limit of USD 500 million.

V - Foreign Venture Capital Investment

1. What are the regulations for Foreign Venture Capital Investment?

A SEBI registered Foreign Venture Capital Investor with general permission from the Reserve Bank of India can invest in a Venture Capital Fund or an Indian Venture Capital Undertaking, in the manner and subject to the terms and conditions specified in Schedule 6 of RBI Notification No. FEMA 20/2000-RB dated May 3, 2000 as amended from time to time.

VI - Procedure for opening Branch/Project/Liaison Office

1. How can foreign companies open Liaison/Project/Branch office in India?

Foreign company can set up Liaison/Branch Offices in India after obtaining approval from Reserve Bank of India. Reserve Bank of India has given general permission to foreign companies to establish Project Offices in India subject to certain conditions.

2. What is the procedure to be followed for obtaining Reserve Bank's approval for opening Liaison Office/Representative Office?

  • A Liaison office can carry on only liaison activities, i.e. it can act as a channel of communication between Head Office abroad and parties in India. It is not allowed to undertake any business activity in India and cannot earn any income in India. Expenses of such offices are to be met entirely through inward remittances of foreign exchange from the Head Office abroad. The role of such offices is, therefore, limited to collecting information about possible market opportunities and providing information about the company and its products to the prospective Indian customers.
  • The companies desirous of opening a liaison office in India may make an application in form FNC-1 along with the documents mentioned therein to Foreign Investment Division, Foreign Exchange Department, Reserve Bank of India, Central Office, Mumbai. This form is available at www.rbi.org.in
  • Permission to set up such offices is initially granted for a period of 3 years and this may be extended from time to time by the Regional Office in whose jurisdiction the office is set up. Liaison/Representative offices have to file an Activity Certificate on annual basis from a Chartered Accountant to the concerned Regional Office of the Reserve Bank of India , stating that the Liaison Office has undertaken only those activities permitted by Reserve Bank of India .

3. What is the procedure for setting up Project Office?

  • Foreign companies are granted projects in India by Indian entities. General Permission has been granted by Reserve Bank of India vide Notification No. FEMA 95/2003-RB dated July 2, 2003 to foreign companies to open Project Office/s in India provided they have secured from an Indian company, a contract to execute a project in India, and the project is funded directly by inward remittance from abroad; or
  • the project is funded by a bilateral or multilateral International Financing Agency; or
  • the project has been cleared by an appropriate authority; 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.
  • However, if the above criteria are not met, or if the parent entity is established in Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran or China, such applications have to be forwarded to Central Office of the Foreign Exchange Department of the Reserve Bank at Mumbai for approval.

4. What is the procedure for setting up branch office?

  • Reserve Bank permits companies engaged in manufacturing and trading activities abroad to set up Branch Offices in India for the following purposes:
  • To represent the parent company/other foreign companies in various matters in India e.g. acting as buying/selling agents in India
  • To conduct research work in the area in which the parent company is engaged
  • To undertake export and import activities and trading on wholesale basis
  • To promote possible technical and financial collaborations between the Indian companies and overseas companies.
  • Rendering professional or consultancy services
  • Rendering services in Information technology and development of software in India
  • Rendering technical support to the products supplied by the parent/Group companies.
  • A branch office is not allowed to carry out manufacturing, processing activities directly/indirectly. A Branch Office is also not allowed to undertake Retail Trading activities of any nature in India. Branch Offices have to submit Activity Certificate from a Chartered Accountant on an annual basis to the Central Office of FED. For annual remittance of profit Branch Office may submit required documents to an authorised dealer.
  • Permission for setting up branch offices is granted by the Reserve Bank of India. Reserve Bank of India considers the track record of the Applicant Company, existing trade relations with India, the activity of the company proposing to set up office in India as well as the financial position of the company while scrutinising the application.

 

 

 

Steps Involved

Step 1. Get the DIN (Director Identification Number) & DSC (Digital Signature Certificate)

What is a Director Identification Number (DIN)?

Director Identification Number (DIN) is a unique identification number issued by the Ministry of Corporate Affairs (MCA), for an existing director or a person intending to become a director of a company.

Documents required for DIN Application

a) Address Proof: Copy of passport / driving license having pin code / electricity bill / telephone bill / Election card / Bank statement certified by Bank Manager (should not be older than 30 days), also PIN code must be mentioned on the address proof.

b) Identity Proof: Copy of PAN Card (Mandatory)

c) One Passport Size color photograph

d) Email Address (Mandatory field of DIN Application)

e) Mobile/Cell Number (Mandatory field of DIN Application)

f) Annexure DIN1 (Verification of an applicant) to be signed by an applicant

Notes:

1. All the documents require “Self attestation”.

2. In case of Foreign national or NRI, passport copy is must and identity proof and address proof should be notarized by an Indian Consulate of home country.

3. While making DIN Application following details are mandatory :

First Name, Middle Name, Last Name, Details of father of an applicant (even in case of a married woman)

4. In case of a Married woman, copy of the Marriage Certificate is required (If DIN needs to be in the “Changed Name”)

 

What is a Digital Signature Certificate (DSC)?

Digital Signature Certificate (DSC) is the digital equivalent (i.e. electronic format) of physical or paper certificates. Examples of physical certificates are drivers’ license, passport. Certificates serve as proof of identity of an individual for a certain purpose; for example, a driver’s license identifies someone who can legally drive in a particular country. Likewise, a digital certificate can be presented electronically to prove your identity, to access information or services on the Internet or to sign certain documents digitally. Since MCA accepts electronic submission of Forms on its website the DSC is mandatory for all the users.

Documents required for obtaining DSC

a) Digital Signature Certificate application Form (duly signed by an applicant). An applicant is required to sign across the photo.

Download the DSC Application Form

b) All other documents are same as required for the DIN Application

Note : All the documents require “Self attestation”

Step 2. Search for the Company Name availability

The Promoters have to provide at least 6 names in the order of their preference/priority. The Promoters can themselves search for the available names by visiting the MCA Website: Check Name Availability

Promoters may also search for the Trademark using MCA Website Check Trademark (If they are going to apply for the Trademark, in future)

Step 3. Application for the Name availability

After drafting of Main Object of the proposed company, need to file e-Form 1A with Registrar of Companies for name availability. The Applicant needs to give 6 proposed names in preference/priority along with their meaning and significance of each word.

Note: The name availability guidelines issued by MCA should be followed.

 

Step 4. Drafting of Memorandum of Association (MOA) & Articles of Association (AOA)

What is a Memorandum of Association?

Memorandum of Association covers fundamental provisions of the company’s constitution. It covers main object and other objects of the company.

What is Articles of Association?

Articles of Association contain rules and regulations governing the internal management of the company. It is a binding contract between company and its members and members among themselves defining their rights and duties.

After name approval from ROC, the next step is to draft MOA & AOA. The subscribers need to specify Name, Address, and Occupation in their own handwriting & sign the subscription pages of MOA & AOA.

If one of the subscribers is a Foreign National or NRI, the subscription page where he/she is supposed to sign on the Memorandum and Articles of Association, should be notarized by an Indian Consulate of Home Country.

Step 5. Filing of e-forms with ROC (Registrar Of Companies)

Following Forms to be filed/uploaded on the MCA Website

a) Form1 (Incorporation document), along with MOA & AOA

b) Form 18 (For Notice of situation of the Registered office)

c) Form 32 (Notice of Directors with their personal details)

Step 6. Payment of ROC Fees & Stamp Duty

After filing of documents online, we need to make payment of ROC fees and Stamp Duty electronically which is based upon the Authorised Capital of the Company.

Please refer to the “Fee Calculator” link on the MCA Website for the ROC Fees.

In order to know the Total statutory fees, note down the fee for the following forms from the dropdown :

Form1A, Form1 (select option “Incorporation of other companies”), Form 18 (select option “Shifting of Registered Office within ROC”, even if it’s not a shifting), Form 32.

Click on the “Calculate Fee” to get the individual form fees & add up all the individual form fees and the “Stamp Duty”. Please refer to the “Stamp Duty” link on the MCA Website. Note : Stamp Duty varies as per the “State” in which the Company is to be registered.

Step 7. Verification of documents / forms by ROC

After payment of all stamp duties and ROC fees, ROC scrutinizes all the documents and forms. Now Form18 and Form32 are approved immediately through “STP” (Straight Through Process) and Form1 is scrutinized by ROC in detail. In case of any objections/queries raised by ROC, resubmission of forms may also require.

Step 8. Issue of Certificate of Incorporation by ROC

Once all the Forms are duly approved by ROC, the digitally signed “Certificate of Incorporation” is emailed to the Directors.

As part of the Green Initiative by the MCA (Ministry of Corporate Affairs), few Certificates including “Certificate of Incorporation” are now issued only in the electronic format i.e. softcopy (having digital signature of ROC Registrar). Once the Incorporation Certificate is received, Company can start it’s operations.

Step-8-Charges-

Statutory cost-ROC filing fees plus stamp duty= Rs 7000/- approximately

(please note-the above statutory cost of ROC is for Private limited Company having share capital of Rs 1 lakh and having 2 directors only.For any  further increase in share capital, the ROC fees would vary.)

Our charges Rs 25000/-.

Total Rs 32000/-.

Please pay Rs 32000/- online by depositing the amount of Indian Rupees Rs 32000/- into our bank account as under-

FILERETURN.COM PRIVATE LIMITED, ACCOUNT NUMBER-0 3 5 6 0 5 0 0 0 9 8 5,   ICICI BANK, TARDEO BRANCH,MUMBAI,INDIA.

Swift code-ICICINBCTS

Once we receive the payment, then we shall email you all the requirements needed by us and our representative shall call you. We shall complete all the formalities right from the application of name, making the Memorandum and Articles of Association and giving you the Certificate of Incorporation of your company.

24 hours mobile-C.A.NIKUNJ SHAH Mobile-  +91-9820442177  tel +91-22-23878358

So get started,-If interested, please shoot an email with your name and mobile number , and address at this email address-

contact@filereturn.com

 

You can also chat online -just log in to yahoo messenger. We have 24 hours online video-audio chat on yahoo messenger id-"filereturn2003" for company formation for nris- FROM USA,UK,UAE and all world and Indian residents all over India.