A Foreign Company is a type of organization you can set up to run your business. As such they need to be registered with the Ministry of Corporate Affairs (MCA) and are subject to relevant Rules and Regulations
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Choosing the right entry structure is the foundation of your India operations. The legal form you choose affects taxation, compliance, ownership, and future funding potential. There are two broad paths — one for companies that want commercial operations, and one for those that do not.
A foreign company can own 100% of an Indian subsidiary where FDI is permitted under the automatic route. The Indian subsidiary is a separate legal entity incorporated under the Companies Act, 2013.
Where 100% FDI is not permitted, a foreign company can form a Joint Venture with an Indian partner. A valid joint venture agreement is required, clearly defining shareholding, board composition, and dispute resolution.
Acts as a communication channel between the foreign head office and Indian entities. Cannot undertake any commercial or trading activity. Maintained entirely through inward remittances from abroad.
Established to execute a specific project in India. Permitted only when the foreign company has secured a contract from an Indian company. Carries out activities incidental to project execution only.
An extension of the foreign parent company in India. Permitted for companies engaged in manufacturing or trading activities. Subject to RBI approval and requires a profit track record in the home country.
Before initiating the registration process, ensure the following requirements are met depending on your chosen structure.
Decide whether to incorporate a subsidiary, joint venture, or establish a liaison, branch, or project office based on your business objectives and FDI guidelines.
Propose a company name through the MCA portal. A foreign company may use its original name with the addition of "India" or an Indian state/city name, subject to availability.
All proposed directors must obtain a Digital Signature Certificate (DSC). Director Identification Numbers (DIN) are allotted through the SPICe+ incorporation form.
Prepare the Memorandum of Association defining business objectives and the Articles of Association defining internal governance rules.
All required documents and declarations are submitted electronically through the official MCA portal.
Within 30 days of establishing a place of business in India, the foreign company must file e-form FC-1 with the Registrar of Companies along with all prescribed documents.
On successful approval, the Certificate of Incorporation (COI) is issued along with PAN and TAN. The company is now legally registered in India.
Documentation requirements vary based on the type of structure chosen. Below is a summary for each route.
A foreign company operating in India — whether through a subsidiary, joint venture, or office — must comply with multiple legislations. The applicable compliance framework differs depending on the type of entity.
Choosing the wrong structure can impact ownership, taxation, and compliance obligations. Get clarity before filing.
Schedule a callAfter registration, a foreign company must maintain ongoing compliance across multiple regulatory frameworks. Key annual and periodic obligations include:
Every foreign company must file FC-4 with the Registrar of Companies within 60 days from the last day of the financial year.
Financial statements for Indian business operations must be filed with the ROC within 6 months of the close of the financial year, along with a list of all places of business in India.
Accounts pertaining to Indian operations must be audited by a practising Chartered Accountant or CA firm registered in India.
Foreign equity inflows, repatriation of profits, and inter-company transactions must comply with FEMA 1999 and RBI Master Directions including FC-GPR filing.
GST registration is required if the company meets the threshold turnover or falls under compulsory registration categories. Periodic returns must be filed.
If the foreign company meets the threshold under Section 135, CSR spending obligations apply. Unspent CSR amounts must be transferred to a prescribed fund within the stipulated timeline.
Get end-to-end support for foreign subsidiary registration, FEMA compliance, and post-incorporation filings. Talk to our team before you file.
Schedule a callSec 2(42) of the Companies Act, 2013 defines a foreign company as a body corporate or company that is incorporated outside India, which
The first and the foremost decision to be taken up while setting up a business in India is choosing the legal form of structure in which the foreign company will run its operation. Choosing the right form of structure is the foundation of a business. Therefore, utmost care and caution have to be taken.
A brief note given below will help us understand the various types of set-ups and characteristics of the same.
1. Foreign nationals/ Foreign Companies can form a company in India through any of the entry strategy mentioned below (Indian Subsidiary Registration).
a) Subsidiaries including Wholly Owned Subsidiaries (100% Indian Subsidiary) A subsidiary company in relation to any other company (that is to say the holding company), means a company in which the holding company—
(i) controls the composition of the Board of Directors; or
(ii) exercises or controls more than one-half of the total voting power either at its own or together with one or more of its subsidiary companies.
Further, the composition of a company's Board of Directors shall be deemed to be controlled by another company if that other company by exercise of some powers exercisable by it at its discretion can appoint or remove all or a majority of the directors.
b) Joint Ventures with other Indian Companies in case 100% FDI is not permitted
It means a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement
In cases where 100% FDI is not permitted and the foreign company wishes to establish a company incorporated in India, and then in such cases, the foreign company can incorporate a company in India in the form of a Joint Venture, however, a valid joint venture agreement is required in such a case.
2. Form of Registration of a foreign company in India (Not having commercial operations in India)
A Liaison Office is a place of business that acts as a channel of communication between the Head Office (or by whatever name called) and entities in India but which cannot undertake any commercial/ Industrial/ trading activity, directly or indirectly, and which maintains itself from the inward remittances received from abroad through normal banking channels
A Liaison Office is a place of business that acts as a channel of communication between the Head Office (or by whatever name called) and entities in India but which cannot undertake any commercial/ Industrial/ trading activity, directly or indirectly, and which maintains itself from the inward remittances received from abroad through normal banking channels.
It is defined as a place of business in India to represent the interests of the foreign company executing a project in India.
It is established only for the purpose of conducting activities relating to and incidental to the execution of the project in India.
A branch office is basically an extension of a Company and in relation to a company, it means any establishment which is described as such.
Branch Offices in India are generally established in India for rendering services such as carrying out research work in which the parent company is engaged or for rendering services in IT and development of software in India etc.
Once a company has decided the legal form of structure of its business in India, then the next step that is to be taken before initiating the procedural formalities of setting up its business is to know the pre-requisites for such a type of business structure.
The pre-requisites for incorporating a subsidiary in India are as follows:
A foreign entity can enter its business in India in the form of Branch Office, Liaison Office or Project Office in case it does not seek to generate revenue from its place of business established in India.
There are no pre-requisites as such for establishing a Branch Office, Liaison Office or Project Office under the Companies Act, 2013 and Rules thereunder. However, once such a place of business in India has been set up, it has to comply with various Indian Acts, Rules and Regulations.
To establish Branch Office and Liaison Office in India, Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations, 2016 has to be adhered to, which requires prior approval of RBI before establishing such place of business in India. Approval from RBI is considered under two routes viz Reserve Bank Route or Government Route.
It further states that for availing approval from RBI following 2 criteria shall be satisfied:
However, if not financially sound, then the Parent Company/ Group Company may submit a Letter of Comfort, subject to the condition that the parent company satisfies the prescribed criterion for net worth and profit.
The procedure of establishment of business in India depends upon the type/form of registration in India.
The incorporation procedure in case of a subsidiary, wholly-owned subsidiary, an Indian company in the form of Joint Venture is the same, subject to different documents as applicable. The procedure for the same is discussed in detail in Part I of this Chapter.
In case, where a foreign company desires to set up its business in the form of Liaison Office/ Branch Office/ Project Office then the procedure as enlisted in Part II of this Chapter is to be followed. The various compliances under the Companies Act, 2013 which need to be adhered to as per Chapter XXII of the Act are elaborated therein.
In case a company wishes to operate in India by forming a subsidiary, wholly-owned subsidiary, or a Joint Venture Company then it needs to follow the procedure as mentioned below.
It is to be noted that if a foreign company wants to incorporate its subsidiary company in India, then the original name of the holding company may be allowed with the addition of the word "India" or name of any "Indian state or city", subject to availability of the name and other conditions being satisfied.Rule 8 of the Companies (Incorporation) Rules, 2014 shall be referred to, while selecting the name of the Indian company to be established.
Before application for name approval, a foreign company has to choose the name on basis of the following:
a. foreign company can apply the same name (name in the foreign country) in India by using the word "India" in its name.
b. If a foreign company is having any Registered Trade Mark then it can use such a trademark for the Incorporation of Company in India.
c. Any other name as decided by the Foreign Company.
Once the name has been selected, the application for name approval has to be filed in web-based form SPICE+ Part A.
Section 380 states that every foreign company shall, within thirty days of the establishment of its place of business in India, deliver to the Registrar for registration-
A foreign company as defined under the Companies Act, 2013 must comply with regulations and rules established under multiple legislations and order(s) such as mentioned below. A foreign company whether established for commercial or non-commercial operations has to adhere to various Indian Acts, Rules and Regulations. It is pertinent to note that the compliances differ on the type of legal structure of the entity.
Depending upon the way a foreign company start a business in India, the documentation also varies. However, lets have look on documents required in each way of doing business as discussed in question no. 2.
Following documents are required for such foreign company registration in India:
1) Address proof of the office (In case of a rented property, the latest electricity bill)
3) For foreign national
2) For Indian citizen
In case of joint venture, well contract is drafted, hence the following points to be taken care of by parties involved: –
1) Dispute resolution agreements
2) Law Applicable
3) Holding shares
4) Transfer of shares
5) Board of Directors Non-Compete
6) Confidentiality, etc
RBI prescribes the criteria for setting up a Liaison office or Representative Office in India, which are as follows:
1) It is essential to have a profit making record in the immediately preceding 3 financial years in the home country, and the net value should be more than USD 50,000.
2) In case, the above condition is not satisfied by the subsidiary company, a letter of comfort is to be submitted by the parent company which satisfies the above condition.
3) Specific approval of RBI under FEMA 1999 and Insurance Regulatory and Development Authority (IRDA) is required.
4) A designated Authorised Dealer Category–I Bank needs to forward an application for establishing an office to the RBI.
5) The office will be given a Unique Identification Number by RBI.
6) Along with the Application, English version of the Certificate of Incorporation/Registration or MOA & AOA (attested by the Indian Embassy/Notary Public), required documents should also be filed.
7) Latest Audited Balance Sheet of the applicant entity should also be filed in the Country of Registration.
In case a foreign company wants to establishment office, and the foreign company has secured a contract from an Indian company to execute a project in India, prior permission from RBI is not needed, provided:
1) Funded directly by inward remittance from abroad or
2) Funded by a bilateral or multilateral International Financing Agency or
3) Cleared by an appropriate authority or
4) A company or entity in India provided that a contract has been granted Term Loan by a bank in India or a Public Financial Institution for the project.
Besides that, in case the above conditions are not met the foreign entity has to approach the RBI for the approval.
By opening a branch office, a Foreign company can conduct business activity in India with the prior approval of RBI, provided:
1) The company should be engaged in manufacturing or trading activities,
2) Profit in the immediately preceding five financial years is necessary,
3) The net worth of not less than USD 100,000 in its home country.
There are huge opportunities in India as a Foreign Company even in the E-commerce Sector where govt recently allow 100% FDI in the E-commerce Sector.
What are laws/ statutes governing the is Foreign Company in India?
Depending upon your business entity set up, The Companies, Act, 2013 and its related rules, Foreign Direct Investment (FDI) policy, Foreign Exchange Management Act (FEMA), 1999 governs the Foreign company business in India.
Yes, the expression "place of business" includes a share transfer or registration office.
Depending upon the non-Compliance and its related penal provision, penalty, fine or other fees are levied upon the foreign company.
The expression "director", in relation to a foreign company, includes any person in accordance with whose directions or instructions the Board of Directors of the company is accustomed to act.
Any document which any foreign company is required to deliver to the Registrar shall be delivered to the Registrar having jurisdiction over New Delhi
Yes. As per the Companies Act 2013 a foreign national or non-resident Indian can function as the director of an Indian company. However, an NRI cannot start a One Person Company or Proprietorship in India.
Where any alteration is made or occurs in the documents or particulars filed under FC-1, the foreign company shall within 30 days of such alteration file an e-form FC-2 which is available at MCA's official website.
No, it is not mandatory to have a registered office at the time of incorporation since the Companies Act, 2013 provision states that a Company shall have its registered office within 30 days of its incorporation.
Yes, as generally remittance of foreign currency is involved, the Reserve Bank of India regulates them through Foreign Direct Investment (FDI) policy, Foreign Exchange Management Act (FEMA), 1999 etc.
Yes Every company to be registered in India must have at least one Indian resident individual as a director. This means the director should have stayed in India for at least 182 days in the previous fiscal year. Nurturelabz will help you with this, should you need any assistance.
The Foreign subscriber is required to visit India and should possess a valid Business Visa for incorporation of a company. However, in case, Person is of Indian Origin or Overseas Citizen of India, the requirement of a Business Visa shall not be applicable.
Yes. It is fine if you do not wish to allot shares with an Indian resident director since there is no rule that a director must also be the shareholder of the company. You can retain complete ownership of the brand, even if you are a foreign-based company.
A "Foreign Company" means any company or body corporate incorporated outside India which a) has a place of business in India whether by itself or through an agent, physically or through electronic mode; and b) conducts any business activity in India in any other manner.
An Apostille is a specialized international attestation that is usually attached with other legal files and is issued by the Secretary of the State. This gives the documents a sense of credibility and authenticity; it also makes the formats acceptable in all 92 countries of the globe that fall under The Hague Convention of October 5, 1961.
The Foreign Company can be incorporated in India in either of the ways:
a) Incorporating in India as "Subsidiary" or "Wholly-owned Subsidiary" or
b) Register a foreign incorporated company as a Liaison Office/Branch Office/Project Office in India
If any foreign company ceases to have a place of business in India, it shall give notice of the fact to the Registrar, and as from the date on which notice is so given, the obligation of the company to deliver any document to the Registrar shall cease, provided it has no other place of business in India.
No, the Companies Act, 2013 requires that every company shall have at least one director who stays in India for a total period of not less than one hundred and eighty-two days during the financial year. However, in case of a newly incorporated company, this requirement shall apply proportionately at the end of the financial year in which it is incorporated.
Yes, if a foreign company is incorporating its subsidiary company in India, then the original name of the holding company as it is may be allowed with the addition of the word "India" or name of any "Indian State or City", if otherwise available. The guidelines for the desirable names are given at [http://www.mca.gov.in/Ministry/pdf/AmendmentRules_08052019.pdf](http://www.mca.gov.in/Ministry/pdf/AmendmentRules_08052019.pdf)
Yes. We call it an Indian Subsidiary company of Foreign Parent Company of yours. Indian laws allow foreign parent companies to retain 100% ownership when they subscribe the shares to the Indian norms and obtain proper foreign company registration online. This is called a subsidiary brand, and you can still incorporate works outside of India, just by having a place of business in India.
The Foreign Company within 30 days of the establishment of its place of business in India has to submit e-form FC-1 which is available at MCA's official website i.e. www.mca.gov.in Technical Guide on Incorporation of Foreign Companies in India 70
MCA has notified Companies (Auditor's Report) Order, 2020 which is applicable for every report made by the auditor for financial years commencing on or after 1st April 2021 9 . The Order applies to every company including a foreign company as defined in clause (42) of section 2 of the Companies Act, 2013 subject to exceptions as prescribed.
Registration or incorporation for any of ways of doing business in India by foreign company as stated in question no. 2 varies. The professionals are involved in this matter as there are various important aspects which are kept in mind while starting the business, who explain all the pros and cons of how to enter in India and which mode is more beneficial for different type of business.
FC-4 is an e-form which is available at the MCA official website. It is a web-based form for filing Annual Return. Every foreign company has to prepare and file this form to the Registrar along with such fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 containing the particulars as they stood on the close of the financial year. This form has to be filed within a period of sixty days from the last day of its financial year.
For foreign company registration in India, you need to possess the below mentioned documents:-
Telephone bill/ Electricity bill/Bank statement/Any utility bill, these bills should not be older than two months.
Yes, the Foreign Company (FC) can raise money through the Indian Market through the issue of debentures or Indian Depository Receipts. If the FC is raising money through the issue of debentures then it has to follow the requirement of section 71 of the Companies Act 2013 and if the FC is raising money through the issue of IDRs, then provision of Sec 390 of the Companies Act 2013 shall be followed.
List of major documents are as follows :
Now this question again depends upon the business entity set up compliances also varies. Let us discuss them point wise. Wholly Owned Company/ Subsidiary Company All the Compliances required under the Companies Act, 2013 FEMA Compliances as per FEMA Act DGFT (Director General of Foreign Trade) compliances Annual Compliances under GST Act Tax filing under the Income Tax Act, 1961 And other specific regulatory act, regulations depending upon the business type of company. Joint Venture
As per the provision of the Companies Act, 2013, every foreign company shall on the outside of every office or place where it carries on business in India shall display the name of the company, the country in which it is incorporate and if the liability of the members of the company is limited, cause notice of that fact in letters easily legible in English characters, and also in the characters of the language or one of the languages in general use in the locality in which the office or place is situated; The same shall be displayed in all business letters, billheads and letter paper, in all notices, and other official publications of the company in legible English characters.
It is mandatory for Every Foreign Company to get its accounts pertaining to the Indian business operations, audited by practicing Chartered Accountant in India or a firm or limited liability partnership of practicing chartered accountants. Explanation- the expressions "Chartered Accountant", "Firm" and limited liability partnership shall have the meanings respectively assigned to them under the Act and Limited Liability Partnership Act, 2008 (6 of 2009) respectively. Further, the provisions of Chapter X i.e. Audit and Auditors and rules made thereunder, as far as applicable, shall apply, mutatis mutandis, to the foreign company.
As per the Companies (Corporate Social Responsibility Policy) Rules, 2014 every company including its holding or subsidiary, and a foreign company defined under clause (42) of section 2 of the Companies Act, 2013 having its branch office or project office in India, which fulfills the criteria specified in sub-section (1) of section 135 should comply with the provisions of section 135 of the Act and Companies (Corporate Social Responsibility Policy) Rules, 2014. Section 135(5) interalia prescribes the time period for spending on CSR projects (including ongoing projects) and Section 135(6) prescribes the time limit for transfer of unspent amount to a Fund prescribed under Schedule VII. Accordingly, a foreign company would need to comply with the requirements relating to CSR spent as stated above.
