8. Foreign Company Set-up & Compliance
Incorporating a foreign company in India requires compliance with the Companies Act, 2013, Foreign Exchange Management Act (FEMA), and regulations from the Reserve Bank of India (RBI) and the Ministry of Corporate Affairs (MCA). A "foreign company" refers to any organization established outside India that operates or has a business presence in India, whether through a physical location or online. Below are a simplified overview of the incorporation methods and the relevant compliance with the Registrar of Companies (ROC).
Modes of Entry for Foreign Companies
Foreign entities can enter India through two primary routes:
- Wholly Owned Subsidiary (WOS) / Joint Venture (JV): A separate legal entity (usually a Private Limited Company) incorporated in India under the Companies Act, 2013. It is treated as an Indian company, allowing 100% Foreign Direct Investment (FDI) in most sectors.
- Branch Office (BO) / Liaison Office (LO) / Project Office (PO): An extension of the foreign parent company.
- Liaison Office: Limited to non-commercial activities like market research and communication.
- Branch Office: Can conduct business (export/import, services) but requires a 5-year profit track record.
- Project Office: Temporary office to execute specific projects.
Incorporation & Registration Process
The incorporation of a subsidiary is done via the Spice+ form on the MCA portal:
- Digital Signature Certificates (DSC): Required for all directors.
- Director Identification Number (DIN): At least one director must be a resident of India.
- Name Reservation: Through Spice+ Part A, ensuring the name is unique.
- Incorporation (Part B): Submission of Memorandum of Association (MOA) and Articles of Association (AOA).
- Certificate of Incorporation (COI): Issued by the Registrar of Companies (ROC) upon approval.
Compliance with ROC (Post-Incorporation)
Foreign companies must adhere to strict ongoing compliance, particularly with the ROC and Ministry of Corporate Affairs:
- Form FC-1 (Within 30 Days): A foreign company (or its registered office) must file Form FC-1 within 30 days of establishing a place of business in India.
- Form FC-3 (Annual Financial Statements): Foreign companies must file financial statements of their Indian operations (balance sheet, profit & loss) within 6 months of the close of the financial year (or 9 months with extension).
- Form FC-4 (Annual Return): Must be filed with the ROC within 60 days of the end of the financial year.
- Auditor's Report: Accounts must be audited by a practicing Chartered Accountant in India.
- Authentication of Documents: All documents filed must be translated into English and notarized/apostilled in the home country.
- Registered Office Verification (INC-22): Must be filed within 30 days of incorporation.
