Foreign Company Registration

1. Whether setting up of a share transfer office will also be considered as a place of business in India?

Yes, the expression “place of business” includes a share transfer or registration office.

2. What is the penalty for Non-Compliances by Foreign Company if it fails to file the forms required to file?

Depending upon the non-Compliance and its related penal provision, penalty, fine or other fees are levied upon the foreign company.

3. What is meant by the term “director” in relation to a foreign company?

The expression “director”, in relation to a foreign company, includes any person in accordance with whose directions or instructions the Board of Directors of the company is accustomed to act.

4. In case any documents are physically required to be submitted to Registrar, then under whose jurisdiction, it has to be submitted?

Any document which any foreign company is required to deliver to the Registrar shall be delivered to the Registrar having jurisdiction over New Delhi

5. Can an NRI function as the director of an Indian Company?

Yes. As per the Companies Act 2013 a foreign national or non-resident Indian can function as the director of an Indian company. However, an NRI cannot start a One Person Company or Proprietorship in India.

6. What if there is any change in the particulars filed under FC-1?

Where any alteration is made or occurs in the documents or particulars filed under FC-1, the foreign company shall within 30 days of such alteration file an e-form FC-2 which is available at MCA's official website.

7. Is it mandatory to have a Registered Office at the time of Incorporation?

No, it is not mandatory to have a registered office at the time of incorporation since the Companies Act, 2013 provision states that a Company shall have its registered office within 30 days of its incorporation.

8. Is the Reserve Bank of India also involved in registering business of Foreign Companies in India?

Yes, as generally remittance of foreign currency is involved, the Reserve Bank of India regulates them through Foreign Direct Investment (FDI) policy, Foreign Exchange Management Act (FEMA), 1999 etc.

9. Do we need an Indian citizen in the Board of Directors?

Yes Every company to be registered in India must have at least one Indian resident individual as a director. This means the director should have stayed in India for at least 182 days in the previous fiscal year. Nurturelabz will help you with this, should you need any assistance.

10. Whether foreign subscriber is required to visit India for incorporation of a subsidiary company?

The Foreign subscriber is required to visit India and should possess a valid Business Visa for incorporation of a company. However, in case, Person is of Indian Origin or Overseas Citizen of India, the requirement of a Business Visa shall not be applicable.

11. Is it fine if we do not wish to allot shares with an Indian resident director?

Yes. It is fine if you do not wish to allot shares with an Indian resident director since there is no rule that a director must also be the shareholder of the company. You can retain complete ownership of the brand, even if you are a foreign-based company.

12. What is a Foreign Company as per Companies Act, 2013?

A “Foreign Company" means any company or body corporate incorporated outside India which a) has a place of business in India whether by itself or through an agent, physically or through electronic mode; and b) conducts any business activity in India in any other manner.

13. What is an Apostille?

An Apostille is a specialized international attestation that is usually attached with other legal files and is issued by the Secretary of the State. This gives the documents a sense of credibility and authenticity; it also makes the formats acceptable in all 92 countries of the globe that fall under The Hague Convention of October 5, 1961.

14. What are the types of companies in which a foreign company can be incorporated in India?

The Foreign Company can be incorporated in India in either of the ways:
a) Incorporating in India as “Subsidiary” or “Wholly-owned Subsidiary” or
b) Register a foreign incorporated company as a Liaison Office/Branch Office/Project Office in India

15. What are the legal requirements in case the foreign company ceases to have a place of business in India?

If any foreign company ceases to have a place of business in India, it shall give notice of the fact to the Registrar, and as from the date on which notice is so given, the obligation of the company to deliver any document to the Registrar shall cease, provided it has no other place of business in India.

16. Can the entire Board of Directors of a subsidiary company be comprised of foreign national director?

No, the Companies Act, 2013 requires that every company shall have at least one director who stays in India for a total period of not less than one hundred and eighty-two days during the financial year. However, in case of a newly incorporated company, this requirement shall apply proportionately at the end of the financial year in which it is incorporated.

17. Whether the subsidiary company can apply for the same name as its foreign holding company?

Yes, if a foreign company is incorporating its subsidiary company in India, then the original name of the holding company as it is may be allowed with the addition of the word “India” or name of any “Indian State or City”, if otherwise available. The guidelines for the desirable names are given at http://www.mca.gov.in/Ministry/pdf/AmendmentRules_08052019.pdf

18. Our company operates outside India. Can we start the business in India and retain 100% ownership?

Yes. We call it an Indian Subsidiary company of Foreign Parent Company of yours. Indian laws allow foreign parent companies to retain 100% ownership when they subscribe the shares to the Indian norms and obtain proper foreign company registration online. This is called a subsidiary brand, and you can still incorporate works outside of India, just by having a place of business in India.

19. What are the statutory requirements of a foreign company upon establishment of its place of business in India relating to the delivery of any documents/information to the Registrar of Companies?

The Foreign Company within 30 days of the establishment of its place of business in India has to submit e-form FC-1 which is available at MCA’s official website i.e. www.mca.gov.in Technical Guide on Incorporation of Foreign Companies in India 70

20. Whether the audit report of a Foreign Company should include the matters stated under Companies (Auditor's Report) Order, 2020?

MCA has notified Companies (Auditor's Report) Order, 2020 which is applicable for every report made by the auditor for financial years commencing on or after 1st April 2021 9 . The Order applies to every company including a foreign company as defined in clause (42) of section 2 of the Companies Act, 2013 subject to exceptions as prescribed.

21. How to register a Foreign Company in India?

Registration or incorporation for any of ways of doing business in India by foreign company as stated in question no. 2 varies. The professionals are involved in this matter as there are various important aspects which are kept in mind while starting the business, who explain all the pros and cons of how to enter in India and which mode is more beneficial for different type of business.

22. What is FC-4 and when is it to be filed?

FC-4 is an e-form which is available at the MCA official website. It is a web-based form for filing Annual Return. Every foreign company has to prepare and file this form to the Registrar along with such fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 containing the particulars as they stood on the close of the financial year. This form has to be filed within a period of sixty days from the last day of its financial year.

23. What are the documents required by a foreign director for the incorporation of an Indian company?

For foreign company registration in India, you need to possess the below mentioned documents:-

• Copy of passport
• Driving Licence/National ID Card

24. Can a Foreign Company which has established its place of business in India, raise money through the Indian Market, if yes, what are the legal requirements?

Yes, the Foreign Company (FC) can raise money through the Indian Market through the issue of debentures or Indian Depository Receipts. If the FC is raising money through the issue of debentures then it has to follow the requirement of section 71 of the Companies Act 2013 and if the FC is raising money through the issue of IDRs, then provision of Sec 390 of the Companies Act 2013 shall be followed.

25. What are the documents required to start and register a company in India?

List of major documents are as follows :

• Photograph of all the Directors and shareholders.
• PAN Card of all the Indian Directors and shareholders.
• Apostille ID Proof of all the Directors (Driving License/Passport/Voter ID).
• Electricity Bill or any other utility bill for the address proof of the Registered Office.

26. What are the Compliances related to Foreign Company in India after the Incorporation?

Now this question again depends upon the business entity set up compliances also varies. Let us discuss them point wise. Wholly Owned Company/ Subsidiary Company All the Compliances required under the Companies Act, 2013 FEMA Compliances as per FEMA Act DGFT (Director General of Foreign Trade) compliances Annual Compliances under GST Act Tax filing under the Income Tax Act, 1961 And other specific regulatory act, regulations depending upon the business type of company. Joint Venture

27. What does the provision of Display of Name, etc of a foreign company indicates?

As per the provision of the Companies Act, 2013, every foreign company shall on the outside of every office or place where it carries on business in India shall display the name of the company, the country in which it is incorporate and if the liability of the members of the company is limited, cause notice of that fact in letters easily legible in English characters, and also in the characters of the language or one of the languages in general use in the locality in which the office or place is situated; The same shall be displayed in all business letters, billheads and letter paper, in all notices, and other official publications of the company in legible English characters.

28. When is the audit of the financial statement of Indian business operation of the foreign company mandatory under the law and who is eligible to audit the same?

It is mandatory for Every Foreign Company to get its accounts pertaining to the Indian business operations, audited by practicing Chartered Accountant in India or a firm or limited liability partnership of practicing chartered accountants. Explanation- the expressions "Chartered Accountant", "Firm" and limited liability partnership shall have the meanings respectively assigned to them under the Act and Limited Liability Partnership Act, 2008 (6 of 2009) respectively. Further, the provisions of Chapter X i.e. Audit and Auditors and rules made thereunder, as far as applicable, shall apply, mutatis mutandis, to the foreign company.

29. Whether CSR spent is mandatory for a foreign company?

As per the Companies (Corporate Social Responsibility Policy) Rules, 2014 every company including its holding or subsidiary, and a foreign company defined under clause (42) of section 2 of the Companies Act, 2013 having its branch office or project office in India, which fulfills the criteria specified in sub-section (1) of section 135 should comply with the provisions of section 135 of the Act and Companies (Corporate Social Responsibility Policy) Rules, 2014. Section 135(5) interalia prescribes the time period for spending on CSR projects (including ongoing projects) and Section 135(6) prescribes the time limit for transfer of unspent amount to a Fund prescribed under Schedule VII. Accordingly, a foreign company would need to comply with the requirements relating to CSR spent as stated above.

30. Where a company which is incorporated outside India and paidup share capital is held by more than 50% of the Indian Nationals, would it still be called a Foreign Company?

In such a situation where not less than fifty per cent. of the paid-up share capital, whether equity or preference or partly equity and partly preference, of a foreign company is held by one or more citizens of India or by one or more companies or bodies corporate incorporated in India, or by one or more citizens of India and one or more companies or bodies corporate incorporated in India, whether singly or in the aggregate, then such company has to comply with the provisions of chapter XXII along with such other provisions of the Companies Act, 2013 as are applicable to a Company which is incorporated in India.

31. What is meant by the term “electronic mode” in relation to a foreign company?

The term “electronic mode" means carrying out electronically based, whether the main server is installed in India or not, including, but not limited to - i. business to business and business to consumer transactions, data interchange and other digital supply transactions;
ii. offering to accept deposits or inviting deposits or accepting deposits or subscriptions in securities, in India or from citizens of India;
iii. financial settlements, web-based marketing, advisory and transactional services, database services and products, supply chain management;
iv. online services such as telemarketing, telecommuting, telemedicine, education and information research; and
v. all related data communication services,
whether conducted by email, mobile devices, social media, cloud computing, document management, voice or data transmission or otherwise;

32. What are the provisions governing the maintenance of books of accounts/records in India by a Foreign Company, if any?

Every foreign company has to mandatorily prepare a financial statement of its Indian business operations in accordance with Schedule III or as near thereto as may be possible for each financial year including:
- Documents as per provisions of chapter IX “Accounts of Companies
- Copies of Consolidated Financial Statement of the parent foreign Co. (In English language/if not in English then its certified translation in English)
- Statement of Related Party Transaction
- Statement of Repatriation of Profit
- Statement of Transfer of Funds
- E-form FC-3 containing a list of all the places of business established by the foreign company in India as on the date of balance sheet.
(all the above docs need to be filed to ROC within a period of six months of the close of the financial year of the foreign company to which the documents relate

33. What are the other statutory provisions that are applicable to Foreign Companies which has established its place of business in India?

The foreign company shall along with the specific provisions as stated in Chapter XXII of the Companies Act, shall adhere to the following provisions a) Provisions of Section 71 relating to Debenture Issue
b) Provisions of Section 92 and 135 relating to Annual Return and CSR respectively (subject to such modifications as may be prescribed)
c) Provisions of Section 128 to the extent of requiring it to keep at its principal place of business in India, the books of account referred to in that section, with respect to monies received and spent, sales and purchases made, and assets and liabilities, in the course of or in relation to its business in India.
d) Provisions of Chapter VI relating to charges on properties which are created or acquired by any foreign company
e) Provisions of Chapter XIV relating to Inspection, Inquiry and Investigation of the Indian Business of a Foreign Company

34. What are the details of the Directors/Secretary that are required to be furnished in e-form FC-1?

The following details of each person who has been listed as Director or Secretary or Equivalent (by whatever name called) of the Foreign Company are required:
a) personal name and surname in full;
b) any former name or names and surname or surnames in full
c) father’s name or mother’s name and spouse’s name;
d) date of birth;
e) residential address;
f) nationality;
g) if the present nationality is not the nationality of origin, his nationality of origin;
h) passport number, date of issue and country of issue; (if a person holds more than one passport then details of all passports to be given)
i) income-tax permanent account number (PAN, if applicable
j) occupation, if any
k) whether directorship in any other Indian company, (Director Identification Number (DIN), Name and Corporate Identity Number (CIN) of the company in case of holding directorship);
l) other directorship or directorships held by him;
m) Membership Number (for Secretary only); and
n) e-mail ID

35. What are the various information/documents that are required to be submitted while filing e-form FC-1?

The list of documents and information that are required while submitting the e-form FC-1 is as listed below:
a) Certified copy of the charter, statutes, or memorandum and articles of the company or other instrument constituting or defining the constitution of the company (Mandatory).
b) List of directors and secretary of the foreign company (Mandatory).
c) Power of attorney or board resolution in favor of the authorized representative(s) (Mandatory).
d) Reserve bank of India approval letter (It is mandatory to attach an attested copy of such approval).
e) Copy of permission letter of other Authority(s)/Regulator(s), if any is required to be attached.
f) declaration that none of the directors of the company or the authorised representative in India has ever been convicted or debarred from formation of companies and management in India or abroad;
g) the full address of the registered or principal office of the company;
h) the full address of the office of the company in India which is deemed to be its principal place of business in India;
i) particulars of opening and closing of a place of business in India on earlier occasion or occasions;

36. What if Foreign Company stops doing business in India?

A foreign company doing business in India can also close down its business like an Indian company. However, its process varies little. A) A wholly owned company or subsidiary can go for winding up or striking of the name of the company from the register of companies as per the Companies Act, 2013 as well as Reserve Bank of India. Liaison Office/ Project Office/ Branch Office are closed in two (2) steps file application of closure of Liaison Office with ROC in E-form FC-3 and then Filing application for closure of Liaison Office with RBI through designated AD Category – I bank and remittance of proceeds abroad and closure of bank account in India. Once ROC closure has taken place, the application for winding up/closure of Liaison Office may be submitted along with the following documents with designated AD Category – I bank: Copy of the Reserve Bank’s approval for establishing the LO. Auditor’s certificate : Along with a statement of assets and liabilities of the applicant and indicating the manner of disposal of assets and the manner how the remittable amount has been generated; Confirming that all liabilities in India including arrears of gratuity and other benefits to employees, etc. of the office have been fulfilled. Confirming that no income accruing from sources outside India (including proceeds of exports) has remained un-repatriated to India. Confirmation from the applicant/parent company that no legal proceedings in any Court in India are pending against the LO. A report from the Registrar of Companies (ROC) regarding compliance with the provisions of the Companies Act, 2013. The designated AD Category – I banks will confirm that the LO had done their respective compliances. Any other document/s, required by Reserve Bank of India/AD Category-I bank while granting approval. Designated AD Category-I bank may allow remittance of winding up proceeds in respect of offices of banks and insurance companies, after obtaining copies of permission of closure from the sectorial regulators (like IRDA etc.) along with the documents mentioned above. The designated AD Category – I bank will report to the Reserve Bank (the Regional Office concerned for LOs), along with a declaration stating that all the necessary documents submitted by the LO have been scrutinized and found to be in order for closure of Liaison Office.

37. What are the various information and documents that are required to incorporate a company in India?

The following information cum documents are required to be furnished while incorporating a company in India through e-form SPICE+ a) Memorandum of Association – eMOA
b) Articles of Association – eAOA*
c) Declaration by first subscribers and Directors
d) Proof of office address
e) Copy of utility bills as permitted by MCA
f) Copy of the certificate of incorporation and resolution passed by the company
g) Resolution passed by Promoter Company
h) Proof of identity and residential address of subscribers, nominee and applicants
i) Resolution of unregistered companies in case of chapter XXI (Part 1) companies
j) Where the subscriber to the memorandum is a body corporate, the memorandum and articles of association shall be signed by a director, officer or employee of the body corporate duly authorized in this behalf by a resolution of the board of directors and where the subscriber is a LLP, it shall be signed by a partner of the LLP duly authorized by a resolution approved by all the partners of the LLP:
k) a declaration in the prescribed form by a chartered accountant (or an advocate, cost accountant or company secretary) in practice, who is engaged in the formation of the company,
l) a declaration by a person named in the articles as a director, manager or secretary of the company, that all the requirements of this Act and the Rules made thereunder in respect of registration and matters precedent or incidental thereto have been complied with;
m) a declaration from each of the subscribers to the memorandum and from all the first directors, if any, in the articles that he is not convicted of any offence in connection with the promotion, formation or management of any company, or that he has not been found guilty of any fraud or misfeasance or any breach of duty to any company under this Act or any previous company law during the preceding five years and that all the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of his knowledge and belief; ─
n) the address for correspondence till its registered office is established;
o) name, including surname or family name, residential address, nationality and such other particulars of every subscriber to the memorandum along with proof of identity, as may be prescribed, and in the case of a subscriber being a body corporate, such particulars as may be prescribed;
p) the particulars of the first directors of the company, their names, including surnames or family names, the Director Identification Number, residential address, nationality and such other particulars including proof of identity as may be prescribed;
q) and the particulars of the interests of the first directors of the company in other firms or bodies corporate along with their consent to act as directors of the company in such form and manner as may be prescribed