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How can a foreign entity/investor open a company in India?

Created By : Sakshi Dureja

Opening a Company in India

ISSUE

How can a foreign entity/investor open a company in India?

STEP BY STEP PROCEDURE

All the forms to incorporate an Indian company are to be filed electronically with the Ministry of Corporate Affairs (MCA). Following are the steps to incorporate an Indian Company:

1. DIN-DSC FOR THE DIRECTORS

 

Director Identification Number (DIN) and Digital Signature Certificate (DSC) are mandatory for the Directors to initiate the incorporation process. No person can be appointed as a Director without DSC & DIN.

2. NAME APPROVAL

 

Name application must be filed with 1 preferred name and 5 alternate names which should not be similar to the names of any existing companies. A no-objection certificate must be obtained in the event that the word is not an ‘invented word’.

The proposed name must not violate the provisions of the name application requirements laid down under the Companies (Incorporation) Rules, 2014.

3. FILING OF CHARTER DOCUMENTS

  • The Memorandum and Articles of the company will need to be prepared in accordance with the needs of the business and the same must be filed with the authority (Charter to be filed electronically for all the companies, except for the companies having more than seven subscribers and the companies having foreign subscribers not having Director Identification Number).
  • The approval authority will need to be provided with certain information, such as the proposed first directors of the company and the proposed address of its registered office. The Registered Office of the company in India is required to be finalized and intimated within 30 days of incorporation.
  • Affidavits and Declarations to be provided by the first subscribers/directors are required to be notarized and apostilled from the respective home countries.
  • One of the directors to be a resident of India, for at least 182 days in the previous calendar year.

4. CERTIFICATE OF INCORPORATION

  • The Certificate of Incorporation provided by the authority at the end of the incorporation process acts as proof of the incorporation of the company.
  • A company, whether private or public, may commence its business operations soon after its incorporation.
  • The company should be capitalized and the corresponding share certificates be issued within a period of 60 days of receiving the certificate of incorporation.

5. POST INCORPORATION COMPLIANCES

  • Once a company is incorporated, it must undertake certain other actions in order to become fully functional.
  • The company must apply for its “Permanent Account Number” (PAN) and “Tax Deduction Account Number” (TAN).
  • The company must register itself with statutory authorities such as indirect tax authorities and employment law authorities.
  • The company must open its bank account to infuse capital funds into its account.
  • The company must put in place the contracts with suppliers and customers that are essential to run the business.
  • The company must apply for various registrations which are essential to start the operations of business.

TIME PERIOD INVOLVED

We follow stringent timeline approach. It generally takes a period of 20-30 working days for a foreign company to start operations in India which includes the time period involved in attestation of documents from the home country.