There are various kinds of companies like public, private or government-owned companies that operate in a country. Depending on their specific nature, suitable rules and regulations have to be formulated for each kind of company. Every country has particular rules and regulations applicable for homegrown companies. Similarly, a company operating in a country other than its home country is required to follow the rules and regulation of the given local area of operation and the home country where it was originally incorporated.
In India, a foreign company is mandated to follow certain special or modified provisions as compared to a domestic company. For instance, a foreign company at the time of making investment in India or setting up an office is required to comply with the Foreign Exchange Management Act (FEMA). Similarly, if the foreign company is involved in selling of goods or providing services then it is required to comply with the Indian tax laws.
A ‘foreign company’ is an entity which is incorporated outside India, but has a place of business in India or conducts any business activity in India in any other manner. The accurate definition of foreign company is given under the Companies Act, 2013 though the concept of ‘foreign company’ was existent in the older act as well.
Definition of Foreign Company under the Companies Act, 2013 and its scope
The term ‘foreign company’ is clearly laid down under Section 2 sub-section 42 of the Companies Act, 2013 (New Act). A foreign company is any company or body corporate incorporated outside India which,
Business ‘Form’ purely depends on the business need. Such need could be to execute one-time project in India, promote the product, understand the market, appoint a distributor, just have a place of business or hire an employee in India etc.
Till the time investment decisions are not firm, business in India can be done by appointing an agent, distributor in India or directly providing services from abroad. Such arrangements are subject to applicable tax withholding rules in India. The payment from India is governed by rules of Foreign Exchange Management Act (FEMA) and controlled by Reserve bank of India (RBI).
Initial approval of a LO is granted by Reserve Bank of India for 3 years. Subsequent request for an extension is generally approved for next 3 years. Further extensions can again be applied, however approval by Reserve Bank of India (RBI), is granted on a case to case basis.
There is a requirement to appoint an Authorized Representative of an LO. He/she can be a resident of India or US. An Authorized Representative can be changed at the will of the Board of Parent Company. The person however must have an Indian Permanent Account Number (PAN). PAN is a unique number, obtained by registering at Indian Income Tax.
BO can be opened with a prior approval from RBI and it’s regarded as Foreign Company in India. As it’s not a separate entity from its parent company, all business risk and liabilities are directly assumed by the Parent company. It can conduct full-fledged business activities in India, except Manufacturing. It can however subtract such activities to Indian vendors. BO, being a foreign company taxed at a higher rate (presently 40%).
You don't need to incorporate. In case you have awarded a specific contract in India, you can set up a PO without prior approval of Reserve Bank of India. After completion for the project the net of tax, proceeds can be repatriated to the Parent Company.
Most of the business sectors don't require a prior approval and 100% FDI is permissible. In all such cases, only reporting is required to RBI, within 30 days of receipt of equity/allotment of shares. Where ever automatic route is not available i.e. sectors which has a cap on FDI, prior approval from Foreign Investment Promotion Board (FIPB) is required e.g. Whole Sale Trading.
Recently the requirement of Minimum Share capital (Private Limited- INR100K, Public Limited- INR500K) is being lifted by Indian Government. There is however requirement of minimum 2 Shareholders & 2 Directors (at least 1 to be resident director). There is also a provision of One Person Company (OPC), however it is allowed only to a resident Indian.
An address to be termed as a “Registered Office’ is required. Commercial or business address can be at a different location. There is no requirement of any minimum area, location etc. A business incorporated at any place in India, can do business throughout India. State Government however may require some local registrations.
I am very pleased with the project you have done, and especially your commitment to providing a quality solution when it meant going the extra mile to do so.
WE WORKED WITH THELEGALBANK TO REGISTERED OUR COMPANY Protocloud Technologies PVT. LTD. THE COMPANY IMPRESSED US WITH THEIR SERVICES.
WE WORKED WITH THELEGALBANK TO REGISTERED OUR COMPANY PIXYRS SOFTECH & RESEARCH PRIVATE LIMITED THE COMPANY IMPRESSED US WITH THEIR SERVICES.
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