SETTING UP BUSINESS IN INDIA

Foreign Investor can commence business in India as:

1. Indian Company*
• Joint Venture
• Wholly Owned Subsidiary

JV/ Wholly Owned Subsidiary as (i) Private Limited or (ii) Public Limited Company, s.t. Companies Act, 2013

2. Foreign Company**
• Liaison Office
To represent the parent company in India
• Branch Office
To undertake activities such as Export, Import, research, consultancy etc.
• Project Office
Activities as per contract to execute project

3. Limited Liability Partnership
• LLP
Subject to provisions of LLP Act, 2008
FDI permitted under automatic route in LLPs operating in sectors/ activities where 100% FDI is allowed, through the automatic route and there are no FDI-linked performance conditions***
* Incorporation of a company in India is s.t. sectoral caps and requisite approvals

**RBI guidelines regarding the establishment of LO/ BO/ PO. As per Companies Act 2013, only a resident Indian with PAN to be appointed for receiving notices in India for foreign company.

***For detailed definitions, clarifications/ exceptions, please refer to Consolidated FDI Policy


Different business establishment in India

PARTICULARS	PRIVATE	PUBLIC	OPC	LLP
Min Members	2	7	1	2 Partners
Max Member	200	Unlimited	1	No Limit
Min Directors	2	3	1	2 Designated Partner
Max Directors	15*	15*	15*	NA
Max Directors	1 Mandatory	1 Mandatory	1 Mandatory	1 Designated Partner
Transfer of ownership	Ownership can be transferred	Ownership can be transferred	Ownership can be transferred to nominee in the event of death of owner	Ownership can be transferred
Subscription of shares	Public subscription not allowed	Public subscription allowed	Public subscription not allowed	Public subscription not allowed
Issue of Prospectus	Not Mandatory	**Mandatory	Not Mandatory	Not Mandatory
Managerial Remuneration	No limit for managerial personnel	Shareholder approval is required, if remuneration payable is above limits	NA	Remuneration is based on LLP agreement
Commencement of Business/ Operations	Declaration to be filed prior to commencement	Declaration to be filed prior to commencement	Declaration to be filed prior to commencement	Immediately after obtaining certificate of incorporation
Legal Status	Pvt Co is a separate legal entity registered under Companies Act, 2013. The Directors are liable for defaults made under the act	Public Co is a separate legal entity registered under Companies Act, 2013. The Directors are liable for defaults made under the act	OPC is a separate legal entity registered under Companies Act, 2013. The Directors are liable for defaults made under the act	LLP is a separate legal entity registered under LLP Act, 2008. The Designated partners of LLP are liable for contraventions under the act
Governing Act/ Law	Companies Act, 2013	Companies Act, 2013	Companies Act, 2013	LLP Act, 2008
Annual Statutory Filings	Annual statement of accounts & annual return with ROC	Annual statement of accounts & annual return with ROC	Annual statement of accounts & annual return with ROC	Annual statement of solvency & annual return with ROC
Annual Filings & Audit	IT return to be filed. Audit mandatory	IT return to be filed. Audit mandatory	IT return to be filed. Audit mandatory	IT return to be filed. Audit mandatory in case turnover exceeds INR 40 lakhs or contribution exceeds INR 25 lakhs

Note:
Resident Director: Sec 149(3) - Every company should have at least one director who has stayed in India for a total period of not less than 182 days in the financial year. *Company may appoint more than fifteen directors after passing a special resolution, further provided that such class or classes of companies as may be prescribed, shall have at least one woman director (Rule 3 of The Companies (Appointment and Qualification of Directors) Rules, 2014) **In case of public issue