India is one of the globe's fastest-growing economies, with significant human potential and a vast market of over 1.2 billion people. The prospects available in India have drawn a significant amount of Foreign Direct Investment (FDI). Every year, FDI inflows rise as more international corporations start operations in India.

To form a business in India, foreign corporations must follow the laws and procedures outlined in the Companies Act, 2013, the Companies (Registration of Foreign Companies) Rules, 2014, RBI guidelines, & FEMA.

Companies (Registration of Foreign Companies) Rules
 

• Within 30 days of foreign company registration in India, every foreign company must disclose specific facts to the Registrar. In addition to the details mentioned in the Company Act of 2013, such companies must post information on their board of directors and secretaries.
   
• According to the Businesses (Registration Offices & Fees) Rules, 2014, such companies must file Form FC-1 & pay the relevant fees to the Registrar. Subsection (1) of Section 380 of the Rules states that these applications must include the relevant supporting papers. Furthermore, such businesses must produce an authenticated copy of the Reserve Bank of India's permission. The Foreign Exchange Management Act also requires approval affidavits from other agencies.
   
• If the registration document supplied to the Registrar is altered, the foreign business must complete Form FC-2 with all the details of the change. The company must file such an application within 30 days of the change taking place.

Foreign Company Under the Companies Act, 2013
 

A foreign company is defined under Section 2(42) of the Companies Act, (the "Act") as a body corporate or corporation that is formed outside India, but-

• Has a presence in India, whether through an agency or directly, either physically or electronically.
• Carries on business in India in any other way.

Methods in which Foreign Companies can be Registered in India
 

A foreign national may perform a foreign company registration in India as a private limited company. Creating a private limited company is the quickest way to start a business in India. Under the FDI policy, up to 100%, FDI into a private limited firm is permissible via the automatic method. A foreign national may establish a private limited business as a joint venture or as a wholly-owned subsidiary.

Joint Venture
 

A foreign company will choose a local partner in India with whom it desires to form a joint venture in order to conduct business in India. The foreign firm and the local partner sign a Letter of Intent or Memorandum of Understanding (MOU) outlining the terms of the joint venture agreement. The joint venture agreement includes all business conditions and must be in accordance with international and regional legislation.

100% owned subsidiary
 

For the purpose of registering as a foreign national/business in India, a foreign national/company can contribute 100% FDI to an Indian firm using the automatic method. When a foreigner invests 100% FDI in an Indian firm, the Indian company becomes the foreign entity's/wholly-owned company's subsidiary.

To conduct business in India, a foreign corporation might establish a liaison office, project office, or branch office. However, operating these offices needs authorisation from the RBI or the government.

Office of Liaison
 

A foreign corporation might set up a liaison office in India to handle all liaison tasks. Through overseas remittance, the parent firm (foreign corporation) will cover all of the costs of a liaison office.

Project management office
 

A foreign firm might set up a project office in India to carry out contracts assigned to it by an Indian corporation. However, in order to create such a project office, the foreign corporation may need to get permission from the Reserve Bank of India.

Subsidiary office
 

A foreign corporation can open a branch office in India. To open a branch office, the foreign firm must be significant and demonstrate profitability.

Foreign Company Registration Process
 

The foreign company registration process in India involves the following steps:-

Procedure for registering a joint venture

• A joint venture is a contract or agreement between two or more people to conduct a business or achieve a commercial goal.
• To start a firm in India through a joint venture, the foreign entity/national must first select a local partner with whom they wish to form a joint venture.
• The foreign entity & the local partner should next sign a Memorandum of Understanding or a Letter of Intent.
• The basis for the joint venture contract should be stated in the Memorandum of Understanding or Letter of Intent.
• The foreign business and the local partner must extensively negotiate and debate the elements of the joint venture agreement.
• The joint venture contract must be in accordance with local and international legislation.
• It should include important items such as dispute resolution agreements, holding shares, applicable law, share transfer, confidentiality, board of directors non-compete, and so on.

Procedure for registering a wholly-owned subsidiary
 

• A wholly-owned subsidiary must be registered with a minimum of two directors, one of whom must be an Indian resident.
• All directors must apply for a Director Identification Number and a DSC (Digital Signature Certificate).
• It is necessary to draught the Memorandum of Association and Articles of Association (AOA).
• The shareholders must sign the MOA.
• Part-A of the SPICe+ form must be used to reserve the company's name (company registration application).
• The foreign company registration application (Part-B of the SPICe+ form) must be completed on the Ministry of Affairs webpage.
• Along with the SPICe+ form, the applicant must provide the appropriate documentation. The following documents are available:
  • Proof of the company's address
  • Indian directors must provide their PAN card, residence evidence, and proof of identification.
  • Foreign directors must present their passports as well as evidence of address, such as a driver's licence, utility bills, or any government licence approved by the Indian consular or consulate.
     
• The applicant must pay the necessary fees & submit the registration application after supplying the required papers.
• All documentation and the SPICe+ form will be verified by the Registrar of Companies (ROC).
• When the ROC confirms that the paperwork is valid, he or she will provide the Certificate of Incorporation & the PAN card.
• The business must open a bank account.
• Share capital documentation must be supplied for FDI compliance following the subscription of the firm share.

The process of establishing a liaison office
 

With the RBI's previous clearance, a foreign business can operate a liaison office in India. The steps are as follows:

• The foreign firm must have made a profit in its home nation in the previous three fiscal years. To form a liaison office in India, the net worth should not be less than USD 50,000.
• The foreign entity shall submit an application to the Foreign Exchange Department through a designated Authorised Dealer Category-I bank (AD).
• It must file the English version of its certificate of incorporation/registration, MOA, or AOA, as well as its most recent audited balance statement, both of which must be attested by the Indian Embassy / Notary Public in the country of registration.
• The RBI will assign a unique identification number to the liaison office.
• When establishing a liaison office in India, the foreign firm must get a PAN from the Income Tax Authorities.
• All expenditures shall be covered solely by inbound foreign exchange transfers from the Head Office, which is located outside of India.
• Suppose a foreign firm that is also a subsidiary of another company does not meet the above criteria. In that case, it can present a Letter of Comfort from its parent company if the following criteria are met.
• After receiving clearance from the IRDAI, a foreign insurance firm can open a liaison office (Insurance Regulatory and Development Authority)
• After receiving clearance from the Department of Banking Regulation, a foreign bank can open a liaison office (DBR).

A liaison office can carry out the following tasks:

• In India, representing the parent firm or parent company.
• In India, promoting export or import.
• Promoting financial or technological relationships on behalf of the group or parent firm
• Communication coordination between parent or group firms and Indian entities.
• However, it cannot conduct any business or make any money in India.

The procedure for establishing a project office
 

When the following requirements are met, the RBI prescribes the procedure for a foreign business to establish a project office in India:

• Only after obtaining a contract from an Indian firm to execute a project in India may a foreign company open a project office without previous clearance from the RBI.
   
• The initiative should be supported entirely via remittances from abroad.
• A bilateral or multinational International Financing Agency should fund the project.
• The project has been approved by the competent authorities.
• An Indian bank or Public Financial Institution has issued a term loan to the firm or Indian organisation offering the contract for the project.

The process of establishing a foreign company's branch office
 

With the previous approval of the RBI, a foreign corporation can operate a branch office in India & do business. The steps are as follows:

• The foreign firm should be involved in commerce or manufacturing.
• It must have made a profit in the previous five fiscal years and have a net worth of at least USD 100,000 in its native country.
• The foreign entity shall submit an application to the Foreign Exchange Department through a designated Authorised Dealer Category-I bank (AD).
• It must file the English version of its certificate of incorporation/registration, MOA, or AOA, as well as its most recent audited balance statement, both of which must be attested by the Indian Embassy or Notary Public in the country of registration.
• The RBI will assign a unique identification number to the branch office.
• The overseas corporation must get a PAN from the Income Tax Department.
• Authorities while establishing a branch office in India.
• All expenditures shall be covered solely by inbound transfers of foreign exchange from the Head Office, which is located outside of India.
• Under FEMA 1999, it requires particular clearance from the Reserve Bank of India (RBI) as well as approval from the Insurance Regulatory and Development Authority.
• If a foreign firm that is also a subsidiary of another company does not meet the above criteria, it can produce a Letter of Comfort from its parent company if the following criteria are met.

Documents Required for Foreign Company Registration in India
 

The prospectus must include the following documents:

• Any expert's permission is required for the prospectus to be issued.
• Contracts for the nomination of the managing director or manager, or a memorandum outlining the specifics
• All material contracts entered into outside of the usual course of business but during the previous two years
• A copy of the underwriting contract
• A duplicate of the power of attorney
• Action for incorrect usage or designation as a foreign corporation

Activities Undertaken by A Foreign Company Branch Office
 

• Goods imported and exported.
• Consulting or professional services are provided.
• Conducting research in areas where its parent corporation is active.
• Promoting financial or technological cooperation in the parent company's interest.
• Acting as a selling or purchasing agent in India on behalf of the parent corporation.
• In India, we develop software and provide IT services.
• Giving technical assistance for the parent company's goods.
• An airline or shipping firm from another country.
• It cannot engage in retail trade, manufacturing, or processing operations in India, either indirectly or directly.

Conclusion
 

Foreign company registration in India necessitates adherence to a number of rules and norms. These criteria are prescribed by the Firms (Registration of Foreign Companies) Rules, 2014, which govern the registration of foreign companies in India. These guidelines govern the publication of information on directors and secretaries to the Registrar. It is critical that company owners stay up to speed on such policies in order to ensure compliance and avoid penalties.