The concept of Foreign Company Registration is not new in the country. It has been an integral part of the process of company registration in India. But with the increase in liberalization and globalization more and more companies have started investing in India for business and profits. There has been a steady rise in Foreign Company Registration in the past decade which is extremely good for increasing Foreign Investments (FIs) in India.
The Companies Act, 2013 in Section 2(42) states the following about the foreign company registration in India-
“(42) ‘foreign company’ means any company or body corporate incorporated outside India which,-
- Has a place of business in India whether by itself or through an agent, physically or through electronic mode; and
- Conducts any business activity in India in any other manner.”
Ways of business operation in India by Foreign Company Registration:
Any foreign company registration incorporated in India can run its business in the following ways as prescribed by the Companies Act, 2013-
- In the case of an Indian Company: If an Indian company can be incorporated as limited in India in which the shares are held by a foreign person or company in the following ways-
- Subsidiary Company: In this type of company, the foreign company must hold a maximum of 49.99% of the total shares of the Indian company for registration.
- Wholly-Owned Subsidiary: For becoming a wholly-owned subsidiary company of a Foreign Company Registration, an Indian company must have 100% foreign Direct Investment (FDI) from the foreign company that too through an automated route.
- Joint Venture: The foreign companies are required to elect a local partner with whom they will operate the Joint Venture Registration. Also, they are required to sign a Letter of Intent or Memorandum of Understanding (MOU) for agreement from the involved parties.
- In the case of a Foreign Company: If a Foreign Company wants to start the business in India by registering itself under the Companies Act, 2013, then it can be done in the following ways-
- Project Office: It can be established by any Indian Company with foreign investments from another foreign company. To open it a prior approval and permission from the Reserve Bank of India (RBI) is required.
- Branch Office: A foreign company can establish a branch office in India if it fulfills the following conditions-
- It must be a large operating business
- It should provide profitability proof at the time of opening the branch office
- Liaison Office: For all the activities in the liaison area, a liaison office can be set up in India by a foreign company. Also, the parent company must bear all the expenses of the liaison office through a foreign remittance.
Process of Foreign Company Registration in India:
The foreign company can establish or register in India by taking up any of the above-discussed business modules. Since there are so many important aspects that must be taken care of during the registration of the foreign company in India, it is advisable to involve a professional who can explain all the key areas, pros, and cons of starting the business in India and also about which type of company will be more beneficiary for the foreign company for operating business in the country.