Doing Business in IndiaDoing Business in India

An Overview ofAn Overview of

Legal Entity Alternatives In IndiaLegal Entity Alternatives In India

This presentation is in five parts as per the serial number and This presentation is in five parts as per the serial number and order given below : order given below :

1.1.Foreign Direct Investment and RBI ApprovalsForeign Direct Investment and RBI Approvals

2.2.Entity Options AvailableEntity Options Available

3.3.Brief Procedure for Entity FormulationBrief Procedure for Entity Formulation

4.4.Various Business Registration RequiredVarious Business Registration Required

5.5.Time Schedule Time Schedule

1. 1. Foreign Direct Investment and RBI ApprovalsForeign Direct Investment and RBI Approvals

Two types of permission based on Industry and Product

Automatic Route With Prior FIPB Approval

•Investment subject to limit i.e Either 51% or 100%

•No prior Approval is required•* RBI should be intimated with

•required documents within 30 days•After receipt of funds

•No Investment in restricted sector •Allowed eg atomic, Lottery etc

•* Intimation can be made after company•Formation.

* Investment subject to limit i.e Either 51% or 100%

* Prior Approval is required* RBI should be intimated with

required documents before bringing funds* No Investment in restricted sector

Allowed eg atomic, Lottery etc* Approval should be after company

Formation.

2. Entity Options Available2. Entity Options Available

Promoter Company Incorporated Outside India

Establish aForeign Company

In India

Incorporate anIndian Company

Project Office

Liaison Office

Branch Office

Private Limited Company

Public Limited Company

2.1 Foreign Company In India2.1 Foreign Company In India

Establish aForeign Company

In India

Project Office Liaison Office Branch Office

Requires approval from RBIAnd Registration with

Registrar of Companies

Requires approval from RBIAnd Registration with

Registrar of Companies

Requires approval from RBIAnd Registration with

Registrar of Companies

Activities Permitted• Export/Import of Goods• Professional/Consultancy

service• Research• Technical / Financial

Collaboration• Buying/Selling Agent• IT/Software Development• Technical Support• Foreign Airline/Shipping• Manufacturing in SEZ• Taxed at rates applicable

to foreign companiesViz. 42.23% currently

Activities Permitted• Represent Foreign parent Co.

Promote Export/Import• Promote Technical/Financial Collaboration

• Communication channelbetween parent company

And Indian companies• Spread awareness and

Explore opportunities• Not allowed to undertake

Business activity• Not allowed to buy

Immoveable property

Activities Permitted• Set-up with RBI

permission for executingSpecific projects in India

• Taxed at rates applicableTo foreign companiesViz. 42.23% currently

Easy operation & fast closureUnsuitable for expansion &

Long term operation

Ideal for exploring Opportunities as a pre-cursor

to actual operations

Limited scope. Effective routeFor limited purpose of large

Project execution

2.2 Indian Company as Subsidiary 2.2 Indian Company as Subsidiary Incorporate an

Indian Company

Private Limited Company Public Limited Company

Key Features•Minimum 2 Directors•Minimum 2 shareholders•Minimum Authorised Capital Rs.0.1 million (approx.Euro 1800)

•Maximum 50 shareholders•Cannot offer shares to Public or outsiders

•Low disclosure and Compliance requirements

•Restrictions on transfer of Shares•Addition Tax if Funds remitted as Dividend @ 12.5%

Key Features•Minimum 3 Directors

•Minimum 7 shareholders•Minimum Authorised Capital

Rs.0.5 million (approx.Euro 9100)•No limit on Maximum shareholders•Appropriate if company wants to Raise equity from investors in India

•Disclosure and Compliance Requirements are elaborate

* Addl Tax if Funds remitted as Dividend @ 12.5%

When compared to Branch Office,Set-up costs are higher & exit is complicated.

Profits are taxed lower at 33%

Recommended when the Foreign promoter has at least a medium term outlook for India or is in partnership with an Indian entity.

Recommended for large Companies orIn case where the Indian Company has plansTo raise equity funding in India outside its

Group of promoter individuals and their Families, members and associates.

Documents Required1. Proof of Identity of All directors i.e Passport/Driving License/ PAN Card/Election ID

2. Proof of Residence of All directors i.e Ration Card/Passport/Bank statement3. NOC From foreign company if the name is to be similar to foreign company

4. Resolution from company if investment were to come from a foreign company5. In case of foreign directors the documents in 1 & 2 are to be certified by notary or Indian embassy in the origin country

3. Brief Procedure for Entity 3. Brief Procedure for Entity FormulationFormulation

We have Following two options

Branch Office Company Formation

1. Operating history of Company worldwide

2. Proposed Interest and Activities

3. Reasons for opening branch in India

4. Any foreign exchange implication

5. MOA and AOA of Foreign Company

6. Resolution for opening branch office in India

7. Filling the required in form FNC 1 with RBI

1. Taking Digital Signatures of Directors

2. Taking directors Identification Number.

3. Application for Name approvals with ROC.

4. Drafting and preparation of MOA & AOA

5. Franking of the required Documents6. Filling of all the documents with ROC

7. Correction of documents 8. Taking Certificate of Incorporation

9. For public Ltd company filling additional forms

10. Filling of Statement in lieu of prospectus 11. Taking Certificate of

Commencement of business

4. Various Business Registration Required4. Various Business Registration Required

Following are the various types of business registration that Following are the various types of business registration that are required to be taken by a business entity operating in are required to be taken by a business entity operating in India.India.

Permanent Account Number Permanent Account Number Tax deduction NumberTax deduction NumberCST and VAT NumberCST and VAT NumberProfessional Tax NumberProfessional Tax NumberServices Tax Registration Services Tax Registration Central Excise RegistrationCentral Excise RegistrationImport Export Code Import Export Code Trademark RegistrationTrademark RegistrationShop and Establishment RegistrationShop and Establishment Registration

5. Time schedule for various activities5. Time schedule for various activities

ActivitiesActivities DurationDurationSetting Branch officeSetting Branch office 5 – 7 weeks 5 – 7 weeks

Formation of Private CompanyFormation of Private Company 3 – 5 weeks3 – 5 weeks

Formation of Public CompanyFormation of Public Company 6 – 8 Weeks 6 – 8 Weeks

Intimation to RBI for Automatic RouteIntimation to RBI for Automatic Route 2 – 3 Weeks2 – 3 Weeks

Taking FIPB Prior ApprovalTaking FIPB Prior Approval 8 – 10 weeks or as per the meeting of 8 – 10 weeks or as per the meeting of Foreign Investment Promotion BoardForeign Investment Promotion Board

Bank Account Opening Bank Account Opening 2 – 3 Weeks2 – 3 Weeks

Taking Permanent Account Number & Tax Taking Permanent Account Number & Tax deduction Numberdeduction Number

2 – 3 Weeks2 – 3 Weeks

Taking VAT and CST Registration & Taking VAT and CST Registration & Profession TaxProfession Tax

2 – 3 Weeks2 – 3 Weeks

Taking Services Tax RegistrationTaking Services Tax Registration 1 – 2 weeks1 – 2 weeks

Import Export CodeImport Export Code 1 – 2 weeks1 – 2 weeks

Trade Mark RegistrationTrade Mark Registration Application to use “TM” 2-3 week Application to use “TM” 2-3 week

Shop and Establishment RegistrationShop and Establishment Registration 2 – 3 weeks 2 – 3 weeks

Facilitating India EntryFacilitating India EntryAbout UsAbout Us

• A registered Company based in MumbaiA registered Company based in Mumbai

• Providing turnkey services to foreign SMEs for doing business in IndiaProviding turnkey services to foreign SMEs for doing business in India

• Geographical focus on business with India.Geographical focus on business with India.

• Office at three location i.e Mumbai , Pune and Jaipur.Office at three location i.e Mumbai , Pune and Jaipur.

• Associates present at Delhi, AhemdabadAssociates present at Delhi, Ahemdabad

• Promoted and managed by experienced and qualified professionals with extensive exposure to multiple functions of businesses in Promoted and managed by experienced and qualified professionals with extensive exposure to multiple functions of businesses in India with a total strength of 65 Semi Qualified and Qualified staffIndia with a total strength of 65 Semi Qualified and Qualified staff

• A comprehensive range of services :A comprehensive range of services :– Business Setup ServicesBusiness Setup Services– FDI and RBI ApprovalsFDI and RBI Approvals– Entity Formation and Registration ServicesEntity Formation and Registration Services– Business Registration ServicesBusiness Registration Services– Accounts Outsourcing ServicesAccounts Outsourcing Services– Statutory Compliance servicesStatutory Compliance services– Audit Assurance ServicesAudit Assurance Services– Services for hiring of India management team recruitment SolutionsServices for hiring of India management team recruitment Solutions

• For details please contactFor details please contact

Rakesh Parik at Rakesh Parik at rakesh@mnrd.inrakesh@mnrd.in

Dilip Singh at dilip@mnrd.in Dilip Singh at dilip@mnrd.in

S R Corporate Services Private Limited, & MNRD & Associates , Chartered AccountantsS R Corporate Services Private Limited, & MNRD & Associates , Chartered Accountants

Block 2, Third Floor, Abbas Manzil, Sahar Rd, Chakala , Andheri East, Block 2, Third Floor, Abbas Manzil, Sahar Rd, Chakala , Andheri East,

Mumbai 400001. IndiaMumbai 400001. India

Tel: 91.22.40263556/7/8/9 Fax: 91.22.2820 0310Tel: 91.22.40263556/7/8/9 Fax: 91.22.2820 0310

www.srcorporateindia.com/www.srcorporateindia.com/ www.indiancompanyonline.com www.indiancompanyonline.com

www.srcorporateservices.comwww.srcorporateservices.com www.mnrd.in www.mnrd.in

www.srcsindia.comwww.srcsindia.com

Thank YouThank You

DisclaimerDisclaimer

This presentation is based on the information from official publications of the Department of Industrial Policy and Promotion and the This presentation is based on the information from official publications of the Department of Industrial Policy and Promotion and the Reserve Bank of India. All efforts have been taken to maintain the correctness of the information provided. While efforts are made to keep Reserve Bank of India. All efforts have been taken to maintain the correctness of the information provided. While efforts are made to keep this information updated, we do not take any guarantee about the accuracy of this information. The purpose of this presentation is to this information updated, we do not take any guarantee about the accuracy of this information. The purpose of this presentation is to provide a broad level overview of the FDI policy environment and options available for foreign direct investments into India. It is not a provide a broad level overview of the FDI policy environment and options available for foreign direct investments into India. It is not a substitute for professional and specific advise that readers are strongly recommended to take before forming a firm opinion, taking substitute for professional and specific advise that readers are strongly recommended to take before forming a firm opinion, taking investment or business decisions regarding investing in India. Market Entry Solutions will not be responsible for any consequences arising investment or business decisions regarding investing in India. Market Entry Solutions will not be responsible for any consequences arising from decisions taken based solely on this presentation.from decisions taken based solely on this presentation.