Having an idea isn’t enough. The idea needs to be implemented, executed or importantly needs a real picture. Adding a name would do no good if it is not officially registered to operate. Hence, as a startup the first and foremost requirement is to find a suitable unique name and register officially.
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Significant to registration process, startup requires a complete setup. Documentation, resources, finances, operations and sales. Well setup can be a lengthy process. It is equally important for founders to know what you might require before you even setup. Maintaining various departments and functioning of an organization depends on the type of company you register.
As the registration process involves key documents different for different countries, in this article we would be focusing on how one can register company in the Indian territory and participate as foreign nationals.
As a startup need to register your Company depending on your business structure. However, if you’re not a professional, you need to contact CA’s, CS and lawyers for registration. You can also today register your companies from anywhere across the globe through simple online platforms developed to cater to all kinds of startups willing to establish companies in India.
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However, it is imperative you register under the right category and format. As a startup you can register as:
- Private Limited Company
- Limited Liability Company
- Sole Proprietor (One Person Company)
- Partnership firm
- Proprietorship firm
- MSME Registration
As foreign nationals, the best suitable type is a Private Limited Company. Though, to register and start your company in India it is a mandate that you have one Indian as a Director on Board. The same individual should be a permanent resident of India.
It is simple and easy to register as a Private Limited Company in India as it also offers 100% direct investment into a company without any third party or Government involvement. Only a few investments require prior approval from the Central Government. The approvals are particularly required in the following sectors:
- Petroleum sector (except for private sector oil refining), Natural gas / LNG pipelines.
- Investing in companies in Infrastructure
- Defense and strategic industries
- Atomic minerals
- Print Media
- Postal Services
- Courier Services
- Establishment and operation of Satellite
- Development of Integrated township
- Tea Sector
- Asset Reconstruction Companies
Incorporation Process for Foreign Nationals:
Incorporating a Private Limited Company in India requires minimum two Shareholders and two Directors. Foreign Nationals are allowed to be the Directors of Indian Private Limited Company.
However, the Board of Directors in Indian Private Limited Company by foreign nationals require an Indian Director who is also a resident. The Indian Director need not be a shareholder in the Company. Thus, most foreign nationals opt to register the company with two Foreign Nationals and one Indian National as Directors of the Company.
Beneficial for foreign nationals in the Indian territory, the foreign nationals can hold 100% shares of the Indian Private Limited Company. Nonetheless, it is important to have two shareholders, and in no scenario can one person or entity hold all the shares of an Indian Private Limited Company.
Further, as Foreign stakeholders there are three best and popular Company Structures to follow:
- Foreign Shareholding- 100% shareholding by foreign nationals as Directors. It is compulsory to have 2 foreign shareholders, one or more Foreign Directors and one or more Indian Directors.
- Foreign Subsidiary- A foreign national can hold 51% or more shares of an Indian Company. Requires one or more Foreign Directors and one or more Indian Directors.
- Joint Venture – In this case, the shares are held by both Indian and Foreign Directors or Company. Requires one or more Foreign Directors and one or more Indian Directors.
The Incorporation Process:
Once you have decided on the name and structure of the Company, you now need to provide documents and procure your certificate to start operating in the Indian territory. As a part of the process you require:
- Obtain Digital Signature
- Obtain Director Identification Number
- Name Approval
- Subscribe to Memorandum of Association
- Subscribe to Articles of Association
Nonetheless, the process can be lengthy and tedious. Yet, as a simple and effective procedure, it is the best way to register your Company in India. In case of any difficulties you can reach out to local Indian tax consulting firms or Organizations, Chartered Accountants to further support you and incorporate your Company.
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