INVESTMENT IN INDIA BY FOREIGN COMPANIES :
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We at SGA , offer our professional expertise to
foreign companies for setting up their businesses
in India . We not only advise you about the foreign investment policy &
procedures of the Government of India but also obtain all the necessary
approvals required.
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The services rendered in this area
include the following :
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Identifying investment
opportunities and businesses/projects
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Company information including
all other registrations like income tax, sales tax, vat etc.
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Assistance in all agreements
& contracts
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Obtaining all approvals &
clearances from Reserve Bank of India , Foreign Investment Promotion Board
(FIPB) & other Government Departments.
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Setting up the organisation
structure specially with respect to accounting systems etc.
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We provide valuable inputs on the most tax
friendly options while conceptualizing the business / investment strategy.
We also provide our expert advice on all other
investment opportunities in India like investment in real estate,
capital markets etc.SETTING UP BUSINESS IN INDIA BY FOREIGN
COMPANIES
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A foreign company planning to set up business operations in
India
has the following TWO options:
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| A1 .AS AN INDIAN COMPANY
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A
foreign company can commence operations in
India
by incorporating a company under the Companies Act, 1956
through:
a.
Joint Ventures; or
b.
Wholly Owned Subsidiaries
Foreign
equity in such Indian companies can be up to 100% depending on the requirements
of the investor, subject to equity caps in respect of the area of activities
under the Foreign Direct Investment (FDI) policy. Details of the FDI policy,
sectoral equity caps & procedures can be obtained on a specific request.
(Click here for making a specific request)
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| 1.
a) Joint Venture With An Indian Partner
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Foreign
Companies can set up their operations in
India
by forging strategic alliances
with Indian partners.
Joint
Venture may entail the following advantages for a foreign investor:
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Established distribution/
marketing set up of the Indian partner
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Available financial resource of
the Indian partners
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Established contacts of the Indian
partners which help smoothen the
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process of setting up of
operations
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| 1. b) Wholly Owned Subsidiary Company
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Foreign
companies can also set up wholly owned subsidiary in sectors where 100% foreign
direct investment is permitted under the FDI policy.
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For
registration and incorporation, set of applications have to be filed with
Registrar of Companies (ROC). Once a company has been duly registered and
incorporated as an Indian company, it is subject to Indian laws and regulations
as applicable to other domestic Indian companies.
Click
here for a flow chart of steps involved in formation of a company
Click
here for Company Formation in India
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| A 1. AS A FOREIGN COMPANY
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Foreign
Companies can set up their operations in
India
through:
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Liaison Office/Representative
Office
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Project Office
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Branch Office
Such
offices can undertake any permitted activities. Companies have to register
themselves with Registrar of Companies (ROC) within 30 days of setting up a
place of business in
India
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| 2.a)
Liaison Office/ Representative Office
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Liaison
office acts as a channel of communication between the principal place of
business or head office and entities in
India
. Liaison office cannot undertake any commercial activity
directly or indirectly and cannot, therefore, earn any income in
India
. Its role is limited to collecting information about
possible market opportunities and providing information about the company and
its products to prospective Indian customers. It can promote export/import
from/to
India
and also facilitate technical/financial collaboration between parent company
and companies in
India
.
Approval
for establishing a liaison office in
India
is granted by Reserve Bank of India (RBI).
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| 2.
b) Project Office
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Foreign
Companies planning to execute specific projects in
India
can set up temporary project/site offices in
India
. RBI has now granted general permission to foreign
entities to establish Project Offices subject to specified conditions. Such
offices cannot undertake or carry on any activity other than the activity
relating and incidental to execution of the project. Project Offices may remit
outside
India
the surplus of the project on its completion, general
permission for which has been granted by the RBI.
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| 2.
c) Branch Office
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Foreign
companies engaged in manufacturing and trading activities abroad are allowed to
set up Branch Offices in
India
for the following purposes:
i.
Export/Import of goods
ii.
Rendering professional or consultancy services
iii.
Carrying out research work, in which the parent company is engaged.
iv.
Promoting technical or financial collaborations between Indian companies and
parent or overseas group company.
v.
Representing the parent company in
India
and acting as buying/selling agents in
India
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vi.
Rendering services in Information Technology and development of software in
India
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vii.
Rendering technical support to the products supplied by the parent/ group
companies.
viii.
Foreign airline/shipping company.
A
branch office is not allowed to carry out manufacturing activities on its own
but is permitted to subcontract these to an Indian manufacturer. Branch Offices
established with the approval of RBI, may remit outside
India
profit of the branch, net of applicable Indian taxes and subject to
RBI guidelines Permission for setting up branch offices is granted by the
Reserve Bank of India (RBI).
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After the entity is set-up in
India :
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| We provide complete, online
back office operations. From recruitment of personnel, to general office
maintenance, to pay roll and other legal & statutory formalities.
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| Opening Bank Account
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Assistance and signatory
services for opening and operating Bank account in India with all major
international banks are also provided. Tell us the preference of Bank you want
to have bank account with and we will get back to you with complete
information.
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Growing
Successfully
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limited companies are
required by law to place on public record their statutory annual accounts,
which must often be audited. These must comply with a range of detailed
disclosure requirements set out in the Indian Companies Act. Sachin Gujar &
Associates , Chartered Accountants ensure that all disclosure requirements are
met, and are authorised to carry out independent statutory audits. Our approach
to audit concentrates effort where it?s most needed, keeping costs to a minimum
and providing a useful management tool. Our advice isn?t just an annual event ?
clients rely on our experience all year round. As your profits grow, we advise
on corporate tax planning and compliance. For more about our Tax Advisory
service click here. Whenever cross border intra group transactions arise, the
difficult issue of transfer pricing is never far behind. We can help you to
determine fair prices and ensure that the documentation required by the tax
authorities is in place. Financial and tax planning for business owners and key
employees is just as important to us ? our personal tax, financial planning and
trust departments aim to maximise your financial growth and minimise tax bills.
Our administrators can perform credit checks on potential customers, assist
with customs and shipping documentation and arrange all the appropriate
insurance. As you establish a India presence, we can follow up on our initial
market strategy with regular marketing reviews.
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The
Advantages
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Our service list allows you
to pick and choose to specifically match your needs. Our outsourcing capability
allows you to achieve India fiscal compliance cost-effectively. We look after
the peripheral issues leaving your company time to concentrate on what?s really
important: succeeding in the India .
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Company Formation in India
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Companies
Act
Companies
incorporated or registered in
India
are governed by the Companies Act 1956.
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Shareholders
and Directors
A.
There is no need to appoint local director or shareholder to incorporate a
company in
India
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B.
Foreign nationals can incorporate company in
India
and hold foreign equity to the extent of 100% which is
dependent upon sector in which company will operate and is subject to approval
from either Reserve Bank of India(RBI) or Foreign Investment Promotion Board
(FIPB).
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Memorandum
& Articles of Association
The
memorandum and articles are the primary legal document of a company. Memorandum
contains the name of the company, authorized share capital, initial members and
object clause. Articles are a set of internal regulations that govern the day
to day operations of the company. Both memorandum and articles have to be filed
with Registrar of companies at the time of incorporation or if there are any
changes thereafter. At least two subscribers (shareholder) are required in the
memorandum and each of the subscriber must subscribe to at least one share in
the company.
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Share
Capital
Shares
must be expressed in a fixed amount. "No par value" or "bearer" shares are not
permitted. Shares to be subscribed must be expressed in Indian rupees.
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Annual
Meetings
An
annual general meeting (AGM) must be held once in every financial year and not
more than 6 months after the end of financial year. However, a company need not
hold its first AGM until 18 months of its incorporation.
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Public
Filings
The
names and personal particulars of the directors and secretary, register of
charges, share capital, registered office address etc. must be filed with the
Companies Registry for public inspection upon incorporation and if there is any
change thereafter.
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Accounts
& Auditors
Every
company is required to appoint an auditor each year at its AGM. An auditor must
be qualified by virtue of the Institute of Chartered Accountants of India Act
1949 and completely independent of the company. Audited accounts of the company
serve as tool for various stakeholders like creditors, bankers, investors and
revenue authorities.
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| How to form a Company in India
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| Steps
to be taken for incorporating a private limited company:-
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Ensure that the name does not resemble the name of any other company
already registered.
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Apply to the concerned ROC to ascertain the availability of name in Form-1 A
along with a fee of Rs.500/-.
If proposed name is not available apply for a fresh name on the same
application.
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Drafting of the Memorandum and Articles of Association, vetting of the same by
ROC and printing of the same.
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Stamping of the Memorandum and Articles with the appropriate stamp duty.
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Get the Memorandum and Articles signed by atleast two subscribers in his own
hand, his father's name, occupation, address and the number of shares
subscribed for and witnessed by atleast one person.
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Get the following forms duly filled up and signed:-
1.
Declaration of compliance - Form-1
2.
Notice of situation of registered office of the company - Form-18.
3.
Particulars of Director, Manager or Secretary - Form-32.
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Present the following documents with ROC with filing fee and registration fee:-
1.
Declaration of compliance - Form-1
2.
Form-1,18 & 32 in duplicate.
3.
Name availability letter issued by ROC.
4.
Power of Attorney from the subscribers in favour of any person for making
corrections
on their
behalf in the documents and papers filed for registration.
Obtain Certificate of
Incorporation from ROC.
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| Additional Steps to be followed by Private Limited
Companies :
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There should be at least 2 directors
of the company.
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The two directors will be the subscriber of the memorandum and they subscribe
the minimum capital.
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Minimum capital for a private company is INR 1,00,000/-
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Registration fee is depending upon the authorized capital of the company. It
should be equal or more than the subscribed capital of the company.
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Regarding non-resident interest in the company Foreign Exchange management Act
is controlled all the issue. You can invest up to 100% depending upon the type
of industry.
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| Additional Steps to be taken for formation of Public
Limited Company
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Consent of Directors to act as such in Form No.29.
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Arrange for payment of application and allotment money by Directors on shares
taken or agreed to be taken.
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File the statement in lieu of prospectus with ROC in schedule-iv of the
Companies Act.
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File a declaration in Form-20 duly signed by one of the Director.
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Obtain the Certificate of Commencement of Business.
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