Foreign Entity In India

Registration of Foreign Company in India

India has emerged as a preferred destination for foreign investment and business expansion. A foreign company intending to establish a business presence in India is required to comply with the provisions of the Companies Act, 2013, and other applicable regulatory frameworks.

A foreign company, as defined under the Companies Act, 2013, may establish its business in India through several modes, including Liaison Office, Branch Office, Project Office, or by forming an Indian subsidiary or joint venture.

Foreign Entity In India

Legal Definition

The incorporation and operation of an Indian subsidiary of a foreign company are governed by:

Companies Act, 2013

Companies (Incorporation) Rules, 2014

Foreign Exchange Management Act (FEMA), 1999

Reserve Bank of India (RBI) guidelines

Income Tax Act, 1961, and

Other applicable laws depending on the business sector

A foreign company can establish its presence in India through the following routes:

  • Liaison Office (LO) – Limited to representing the parent company and permitted to act as a communication channel; no commercial or revenue-generating activities allowed.
  • Branch Office (BO) – Permitted to conduct certain commercial activities such as export/import, research, consultancy, etc., subject to RBI approval.
  • Project Office (PO) – Set up to execute specific projects in India, generally in sectors where the foreign entity has secured a contract from an Indian company.
  • Wholly Owned Subsidiary (WOS) – An Indian company incorporated under the Companies Act, 2013, with 100% foreign shareholding.
  • Joint Venture (JV) – An Indian company formed in collaboration with Indian partners, subject to sectoral FDI limits.

If a foreign company establishes a place of business in India, it is required to register with the Registrar of Companies (RoC) under Section 380 of the Companies Act, 2013.

Documents to be Filed with ROC (Form FC-1):

  • Certified copy of the charter, statutes, or memorandum and articles of the company
  • Address of the principal place of business in India
  • List of directors and secretary of the company
  • Details of the authorised representative(s) in India
  • Power of attorney in favour of the authorised representative
  • Details of the place of business in India
  • RBI approval (if required)
  • Board resolution authorising establishment of the business in India

Once registered, a foreign company is required to comply with various provisions of the Companies Act, 2013, including:

  • Filing of annual accounts and returns in prescribed forms (e.g., FC-3, FC-4)
  • Maintenance of books of account relating to Indian operations
  • Display of company name and country of incorporation at the place of business
  • Filing of financial statements in respect of Indian operations
  • Notification to RoC for any change in company structure, directors, address, etc.

The registration process generally involves:

  • Step Estimated Timeline
  • Preparation of documents 3–5 working days
  • Filing of FC-1 with RoC 1–2 working days after documentation
  • Review and registration by RoC 5–7 working days (subject to approvals)
  • Regulatory Approvals
  • In addition to RoC registration, a foreign company may require:
  • Approval from the Reserve Bank of India (RBI) under FEMA Regulations, for establishing LO/BO/PO
  • Approval from other sectoral regulators, depending on the nature of business
  • PAN, TAN, GST registration, and opening of bank account in India
  • Tax and Other Registrations

A foreign company having a business presence in India is required to comply with applicable tax laws:

  • Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN)
  • Goods and Services Tax (GST) registration if applicable
  • Withholding tax compliance on payments to non-residents
  • Transfer pricing regulations where applicable
  • Applicability of Other Laws

Depending on the business sector and operations, foreign companies may be subject to additional laws and regulations such as:

  • FEMA, 1999
  • Income Tax Act, 1961
  • GST laws
  • SEBI regulations (if investing in listed companies)
  • Labour laws for local employees

Conclusion

Foreign companies intending to establish a presence in India are required to comply with the provisions of the Companies Act, 2013, FEMA, and other regulatory frameworks. The choice of business structure (e.g., Liaison Office, Branch Office, Subsidiary) should be based on the intended business activities, regulatory requirements, and sectoral guidelines.

For detailed procedures and legal interpretation, stakeholders are advised to refer to the Companies Act, 2013, MCA notifications, RBI guidelines, and other applicable statutory provisions.