Foreign Company Registration
A Foreign Company is a business entity incorporated outside India that establishes a presence in the country through a physical office, branch, liaison office, or by engaging in business activities in any other form.
As per the Companies Act, 2013, such companies must adhere to Indian regulatory requirements to operate lawfully within the country.
A foreign entity can establish its presence in India in the following ways:
1. As an Indian Company (Under the Companies Act, 2013)
- Wholly Owned Subsidiary – 100% ownership for companies in permitted sectors.
- Joint Venture – Collaboration with an Indian entity for mutual growth.
2. As a Foreign Company
- Liaison Office (LO) / Representative Office – Establish a presence for market research and networking.
- Project Office (PO) – Set up an office for executing specific projects in India.
- Branch Office (BO) – Engage in commercial activities while being an extension of the parent company.
Liaison Office / Representative Office
A Liaison Office (LO) acts as a communication bridge between the parent company and Indian businesses. It is not allowed to conduct commercial activities but can:
- Explore business opportunities in India.
- Facilitate communication between the parent company and Indian stakeholders.
- Promote technical and financial collaborations.
Key Requirements for Liaison Office Approval
- A profit-making track record for the last three financial years in the home country.
- A net worth of at least USD 50,000.
- RBI (Reserve Bank of India) and FEMA 1999 approval required.
- An application must be forwarded through an Authorized Dealer Category–I Bank.
Project Office
Foreign companies can establish a Project Office (PO) in India without prior RBI approval if :
- The project is funded through direct foreign remittance.
- It is funded by an international financial institution.
- It is authorized by an Indian regulatory authority.
- An Indian company has secured a term loan for the project from a bank or public financial institution.
- If these conditions are not met, RBI approval is required.
Branch Office (BO)
A Branch Office (BO) allows foreign companies to conduct full-fledged business operations in India with RBI approval.
Eligibility Criteria for Setting Up a Branch Office
- Engaged in manufacturing or trading activities.
- Profitable in the last five financial years.
- Net worth of at least USD 100,000 in the home country.
Permitted Activities of a Branch Office
- Import & export of goods.
- Providing professional or consultancy services.
- Conducting research in line with the parent company’s business.
- Facilitating technical and financial collaborations.
- Representing parent company in India as a buying/selling agent.
- Providing IT and software development services.
- Offering technical support for products supplied by the parent company.
Note : Branch Offices cannot engage in manufacturing but can subcontract to Indian manufacturers. Profits can be repatriated after applicable tax deductions.
Minimum Requirements
At least two individuals are required for incorporation.
Director Identification Number (DIN).
No Minimum Capital Required
At least one partner must obtain a DSC.
One Indian Resident Director.
Advantages
Limited Liability Protection to Director’s personal assets.
Enhanced Credibility and professional image.
Ease in Raising Funds and Loans for business growth.
Preferred Structure for Startups.
Registration Process
To establish a Foreign Company in India, the company must complete a structured registration process as per the Companies Act, 2013 and other regulatory requirements. Below is a stepby-step guide to the registration process:
Obtain Digital Signature Certificate (DSC) :
- Since company incorporation in India is conducted online, at least one authorized representative of the foreign company must obtain a Digital Signature Certificate (DSC). The DSC is essential for signing and submitting electronic forms to the Ministry of Corporate Affairs (MCA).
Obtain Director Identification Number (DIN) :
- At least one director of the proposed company (who can be an Indian resident or a foreign national) must obtain a Director Identification Number (DIN) from the MCA.
Name Approval (RUN Application) :
- The proposed company must apply for name reservation through the Reserve Unique Name (RUN) service provided by the MCA.
- The name should include the suffix “(India) Limited” if it is a public company or “(India) Private Limited” if it is a private company.
Filing Form FC-1 with the Registrar of Companies (ROC) :
Within 30 days of establishing a place of business in India, the foreign company must file Form FC-1 with the Registrar of Companies (ROC).
Details to be Provided in Form FC-1:
- Business sector details (to check if RBI approval is needed).
- Certified copy of the charter, memorandum, and articles of association (translated into English if necessary).
- Complete registered/principal office address of the foreign company.
- List of directors and company secretary details.
- Name and address of the authorized representative in India.
- Address of the principal place of business in India.
- Details of past business operations in India, if any.
- Declaration confirming that none of the directors or authorized representatives have been convicted or debarred from forming companies in India or abroad.
RBI Approval Under FEMA (If Applicable) :
If the foreign company plans to establish a Liaison Office, Branch Office, or Project Office, prior approval from the Reserve Bank of India (RBI) is required under Foreign Exchange Management Act (FEMA), 1999.
Key RBI Approval Conditions :
- The foreign company must have a profit-making track record for the last three financial years.
- The company must have a net worth of at least USD 50,000 (for Liaison Office) or USD 100,000 (for Branch Office).
- The application must be submitted through an Authorized Dealer Category-I Bank.
- Once RBI approval is granted, the company will receive a Unique Identification Number (UIN).
Obtain PAN & TAN, Open a Bank Account :
- Applications for PAN and TAN can be submitted online through the NSDL portal.
- A foreign company must open a business bank account in India to manage transactions.
- The bank account should be opened with an RBI-authorized bank.
Post-Incorporation Compliance :
Once incorporated, the foreign company must ensure annual compliance with Indian regulations, including:
- Annual Financial Statements Filing (Form FC-3)
- Annual Return Filing (Form FC-4)
- Income Tax Filing
- Compliance with FEMA & RBI Reporting Requirements (if applicable)
Documents Required for Registration
A foreign company must submit the following documents within 30 days of establishing its place of business in India
- Business sector details (to determine if RBI approval is required).
- Certified copy of the charter, statutes, memorandum & articles (with English translation if applicable)
- Complete registered/principal office address of the foreign company.
- List of directors and company secretary details.
- Name and address of the authorized person in India to accept legal documents.
- Address of the principal place of business in India.
- History of any prior business presence in India.
- Declaration confirming that none of the directors or authorized representatives have been convicted or barred from business formation.
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