Registration of a Foreign Company in India by 3E Accounting

Registration of a Foreign Company in India

The registration of a foreign company in India is simple but it can be tedious if you are unfamiliar with the procedure. These guidelines are prescribed in the Companies (Registration of Foreign Companies) Rules 2014. It will take you approximately three to ten working days to complete the company registration process in India.

Before you start investing in a growing potential or conduct business in India, you first need to establish your company’s legal presence by registering your business as a private limited company or as a foreign company. However, you first must decide whether it needs to be a commercial entity or not.

 

Subsidiary Company Entry Routes for Commercial Operations

Under Section 2 subsection 42 of the Companies Act, 2013, a foreign company is defined as a company or a corporate body incorporated outside India and has a place of business whether by itself or through an agent.

Foreign nationals or Companies can form a company in India using either of the two methods mentioned below: wholly owned subsidiaries or joint ventures with other Indian Companies.

 

Non-commercial Operations in India

Even if you have no intentions for commercial operations in India, there are three different types of foreign entities that you can register. The first is a Liaison Office also known as a Representative Office. Then we have a Project Office and a Branch Office.

 

Private Limited Company (PLC)

The registration of a PLC is governed by the Companies Act 2013 lays down the procedure for registering and managing a company and its affairs. The Ministry of Corporate Affairs monitors the compliance and formalities related to the formation of the company through their E-portal www.mca.gov.in.

Every foreign company must, within thirty days of establishment, deliver to the Registrar for the registration, a list of directors and Secretary of such company. They must also file with the registrar Form FC-1 with the required fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 along with the required documents that are to be delivered for the registration by a foreign company in accordance with the provisions of the sub-section (1) of section 380. The application needs to be supported with an attested copy of the approval from the Reserve Bank of India under the Foreign Exchange Management Act or the Regulations, and from other regulators if any. The approval is needed by the foreign company to establish a place of business in India. If you possess a declaration from the authorized representative of such foreign company then no such approval is needed. If there is any alteration to the document delivered to the Registrar for the registration under the sub-section (1) of section 380, the foreign company must file with the Registrar, a return in the Form FC2 with the fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 containing all the particulars of the alteration, within a time period of thirty days from the date on which the alteration was made or occurred.

 

Preparing the Financial Statement of the Foreign Company

The financial statement of its Indian business operations of a foreign company must be prepared in accordance with Schedule III or as close as possible for each financial year. There are a few documents that need to be annexed with the financials. Among them are: –

  • Accounts of Companies documents required to be annexed thereto in accordance with the provisions of Chapter IX of the Companies Act 2013
  • Copies of latest consolidated financial statements of the parent foreign company, as submitted by it to the regulatory authority in the country of its incorporation under the provisions of the law for the time being in force in that country:
    • Provided that where such documents are not in the English language, there shall be annexed to it a certified translation thereof in the English language
    • Such other documents as may be required to be annexed or attached in accordance with sub-rule (2).

 

Fund Transfer to the Foreign Companies Registered in India

A statement of transfer of funds, including dividends, related to any fund transfer between the place of business of the foreign company in India and any other related party of the foreign company outside India including its holding, subsidiary and associate company, shall include
i. Date of transfer;
ii. Amount of fund transferred or received;
iii. Mode of receipt or transfer of fund;
iv. Purpose of such receipt or transfer; and
v. Approval of Reserve Bank of India or any other authority, if any.

All documents shall be submitted to the Registrar of Companies within a period of six (6) months of the close of the financial year of the related foreign company. Under special circumstances and on an application made in writing by the foreign company concerned, the Registrar of Companies may for any special reason, extend the period by a period not exceeding three (3) months.

 

Audit Requirements

Every foreign company should get its accounts audited by a practising Chartered Accountant in India or a firm or limited liability partnership of practising chartered accountants. Any account pertaining to the Indian business operations needs to be prepared in accordance with the requirements of clause (a) of sub-section (1) of section 381 and rule 4.

 

Registration of Places of the Business of Foreign Companies Registered in India Along With the Financial Statement

A foreign company must file a list of all the places of business established by the foreign company in India as on the date of the balance sheet with the Registrar of Companies using Form FC.3. This shall be annexed along with the financial statement and the fee required as stated under Companies (Registration Fees) Rules 2014.

 

Annual Return of Foreign Companies Registered in India

A foreign company is given a period of sixty (60) days from the last day of its financial year to file its annual return in Form FC.4 along with the fee as provided in the Companies (Registration Fees) Rules 2014.

 

Office of Registrar of Companies:

All documents required to be delivered by any foreign company is to be delivered to the Registrar having jurisdiction over New Delhi. The fees required to be paid for the registration of any document can be found in the Companies (Registration Offices) Rules 2014. The notice should be given to the Registrar should any foreign company cease to have a place of business in India.

 

Certified True Copy of Documents

A copy of any document or instrument constituting or defining the constitution of a foreign company is required to be duly certified to be a true copy in two ways.

  1. Outside the Commonwealth-
    • the copy shall be certified as a true copy by-
      • an official of the Government to whose custody the original is situated; or
      • a Notary (Public) of such Country; or
      • An officer of the company.
  2. Within the Commonwealth, the copy of the document shall be certified as a true copy by-
      • an official of the Government to whose custody the original of the document is committed; or
      • a Notary (Public) in that part of the Commonwealth; or
      • An officer of the company, on oath before a person having authority to administer an oath in that part of the Commonwealth.
  3. Any altered document also needs to be duly certified in the manner mentioned above.
  4. If the Company is incorporated in a country outside the Commonwealth, but a party to the Hague Apostille Convention, 1961-
    • the copy of the documents shall be certified as a true copy by an official of the Government to whose custody the original is committed and be duly apostilled in accordance with Hague Convention;
    • a list of the directors and the secretary of the Company, if any, the name and address of person resident in India, authorized to accept notice on behalf of the Company shall be duly notarized and be apostilled in the Country of their origin in accordance with Hague Convention;
    • the signatures and address on the Memorandum of Association and proof of identity, where required, of foreign nationals seeking to register a company in India, shall be notarized before the notary of the country of their origin and be duly apostilled in accordance with the said Hague Convention.

 

Notarization & Authentication of Translated Documents:

All documents need to be filled with the Registrar, shall be in English and if it isn’t then there needing to be a translation attached duly certified to be correct in the manner given in these rules. If the translation is made outside of India, said document needs to be authenticated by the signature and the seal, if any, of the official having custody of the original, or a Notary (Public) of the country where the company is incorporated; provided that the company was incorporated in a country outside the Commonwealth. The signature or seal of the person certifying needs to be authenticated by a diplomatic or consular officer empowered in this under section 3 of the Diplomatic and Consular Officers (Oath and Fees) Act 1948. However, if the translation is made within India, it should be authenticated by an advocate, attorney or pleader entitled to appear before any High Court or an affidavit, of a competent person having, in the opinion of the Registrar, an adequate knowledge of the language of the original and of English.

 

Documents to Be Annexed to Prospectus:

The following documents shall be annexed to the prospectus, namely: –

  1. any consent to the issue of the prospectus required from any person as an expert;
  2. a copy of contracts for the appointment of managing director or manager and in case of a contract not reduced into writing, a memorandum giving full particulars thereof;
  3. a copy of any other material contracts, not entered in the ordinary course of business, but entered within preceding two years;
  4. a copy of underwriting agreement; and
  5. a copy of power of attorney, if a prospectus is signed through a duly authorized agent of directors.

 

India has a vast and built-in potential market to explore. If you are looking to conduct business in this market, you need to establish your company’s presence in India by registering your business and filing the appropriate forms with the proper Indian authorities. If you are looking to establish a foreign company in India, our team here at 3E Accounting will guide you through the entire process.

Registration of a Foreign Company in India