Company Registration

In India, this entity is officially called the Private Limited Company.

Private Limited Company is the most prevalent and popular type of corporate legal entity in India. Private Limited Company registration is governed by the Ministry of Corporate Affairs, Companies Act, 2013 and the Companies Incorporation Rules, 2014.

To register a private limited company, minimum two shareholders and two directors are required. Further, foreign nationals, foreign corporate entities or NRIs are allowed to be Directors and/or Shareholders of a Company with Foreign Direct Investment, making it the preferred choice of entity for foreign promoters.

The Indian LLC is recommended entity to enter into the local market and limit the liability of foreign investors, especially for export anddirect sales, manufacturing and software development companies. Foreign investors with this permanent establishment will have access to a widerange of government subsidies that incentivize re-investment into the country.

A Limited Liability Partnership (LLP) is a hybrid of a Limited Liability Company (LLC) and a General Partnership (GP).The partners enjoy limited liability, but taxed as individuals.

The LLP is legally tax exempt of corporation tax; but income tax is payable in the country of registration;

Instead of shareholders, there are partners;

Instead of directors, there are managers;

Instead of MOA & AOA, there is a Partnership Agreement.

Characteristics :

• Separate legal entity:
  Like a company, LLP also has a separate legal entity. So the partners and the LLP in are distinct from each other. This is like a company where partners are different from the company.
• No requirement of minimum capital:
  In the case of companies there should be a minimum amount of capital that should be brought by the members or owners who want to form it. But to start an LLP there is no requirement of minimum capital.
• Minimum number of members:
  To start a limited liability partnership at least two members are required initially. However, there is no limit on the maximum number of partners.
• No requirement of compulsory audit:
  All the companies, whether private or public, irrespective of their share capital, are required to get their accounts audited. But in case of LLP, there is no such mandatory requirement. A limited liability partnership is required to get the audit done only if:
  • the contributions of the LLP exceeds ₹ 25 lakhs or
  • the annual turnover of the LLP exceeds ₹ 40 lakhs

The foreign company establishing a Project Office in India is required to furnish a report through the concerned AD Category – I bank branch to the concerned Regional Office of Reserve Bank of India under whose jurisdiction the Project Office is set up within 60 days of establishment of the new Project Office with the following details.

Foreign entities setting up Project Office in India need to submit a report to the Director General of Police (DGP) of the state concerned where the project office has been established within five working days of the PO becoming functional.

In case of more than one office, the report should be furnished to each DGP of the concerned state where the office has been established. Thecopy of the report in should also be filed with AD Bank by the newly established Project Office.

The Project Office shall also submit an annual activity certificate to the AD branch.

Foreign companies, as they grow, seek to expand their business over the globe. The establishment of branch offices, herein referred to as BOs, achieves this strategic growth. Branch Offices help companies with an easier management of their businesses in the particular areas. A BO is an extension of the Parent Company.

Section 2(42) of the Companies Act, 2013, defines a foreign company as a company or a body corporate incorporated outside India and which has a place of business whether by itself or through an agent, in this country.

India sets up several rules under the RBI (Reserve Bank of India) and FEMA, 1999. The establishment of a BO is regulated as per Section 6(6) of FEMA, 1999 read along with notification no FEMA 22/2000-RB dated May 3, 2000. Under Section 11 of the aforementioned Act, RBI issues directions to the authorised persons regarding the regulations to be followed when conducting foreign exchange business with the customers or constituents. The BOs that were established in the pre-FEMA period are now required to regularise their offices under FEMA through the RBI, as per the recent regulations.