Incorporation of a firm by NRIs

In India , private limited company and the LLP both firm Incorporation are considered as the separate legal status. The company registration process in case of foreign investors takes little bit longer for few weeks and each stages of the process are conducting via online.

Applying the correct legal entity is the key considerations for foreign investors and entrepreneurs. This is the first stage of incorporation when they planning to do their business in India.

There are vast varieties of options depending on the business requirements. Here in this article I am going to share the two important points when a non-resident does their business in India.

The two reasons are Limited liability partnership and private limited company Because of the below reasons.

Two mandatory reasons for firm Incorporation

Global tolerability: both private and LLP are globally acceptable or tolerable. Both forms are having same legal authority and regulatory recognitions.

Limited duties: the shareholder of the private company and the partners of the LLP are having less duty. And most of the time it is an added advantages to choose these entities as their preferred options.

Jurisdictive simplicity: income tax law, corporate law, foreign exchange regulation etc are some of the main ruling principles in India for every business. Consider private and LLP as a separate legal form from their members and partners.

Both the private and LLP are recognizing with different laws in India. The private limited company is registering by Companies Act 2013. Likewise, an LLP is organizing by the Limited Liability Partnership Act 2008 (LLP Act). There are various jurisdictive laws associate with foreign investors who want to build a base in India. The laws are Foreign Exchange Regulations, Income-tax laws, etc.

 Private company sealing by a non-resident shareholder

firm Incorporation by Non Resident India (NRI) | Corpstore

The private limited company registration is based on online procedures and it takes weeks to get complete in case of foreign investors, as we already mentioned. The record preparation and the drafting of documents normally take extra time.

Document drafting includes collecting the passport copy along with utility bill or driving license of the shareholder. In case of body corporate member the resolution passed by the body corporate along with trademark of the proposed name is mandatory.

Cases like if the proposed shareholders are non-resident, there are maximum amount of requirements from the companies Act. If the subscriber is from one of the common wealth country, then the documents should authenticated by the lawyer from respective jurisdiction.

The shareholders who are from the countries which are signatory to The Hague Convention and other company jurisdictions, then the documents should notarize and apostilled.

Business activity in India

firm Incorporation by Non Resident India (NRI) | Corpstore

Another key consideration is the proposed company activity in India. The department of industrial policy and promotion supports foreign direct investment (FDI) and it provides guidance vis-à-vis sectors / areas open for foreign investment into India. Most of the sectors are open to foreign investment without any legal requirement. Some need government approval for foreign investment. Such as multi-brand retail trade, defence, telecom, broadcasting and aviation. As well as the peoples outside from India have to ensure that the conditions specified under the FDI are connecting and satisfactory.

The next key consideration is the fund requirement and the mode of funding in a company Incorporation. The company who is having a foreign shareholder get the funds from equity investment or debt funding or both.

Debt funding

Debt funding has certain restrictions like maturity period, all in cost ceiling, etc in case of non-resident entrepreneurs. Acquiring real estate and other lending involves funds from foreigners and here includes excepting of general funds. Certain cases the exceptions are raising at the time of foreign equity sharing.

In certain cases like debt for private sectors the approval from Reserve Bank of India is mandatory. And also mandatory to get the foreign debt funds. If you want to register a company, issue of share certificates, appointment of auditors and obtaining tax registrations etc need initial legal requirements.

LLP Registration with a non-resident partner

LLP formation is also known as online based. Each and every company registration process are online centric. It also last up to few weeks. The time lag is mainly because of document authentication and preparation. The government introduced a new form called FiLLiP to reduce the registration lagging.

The newly registered Limited liability companies have to submit the LLP agreement to the registrar to cut out the time for the complete the setup process. Authentication document for both LLP and the company are same as mentioned above. Always foreign financing is permitting under the automatic route in LLP where 100% FDI is allowed and where there is no such FDI links. Based on the funding of an LLP currently there is no such requirement for debt funds from overseas.

Other requirements in an LLP includes appointing any designated partners, get the tax registration, and other regulatory registrations etc. The non-resident investors can prefer any type of legal entity based on their business requirements. LLP Registration and participate in the very huge opportunity is one of the outstanding economies in the world.


firm Incorporation by Non Resident India (NRI) | Corpstore
  1. What about the minimum number of requirements in a private company and in LLP?

In private company there must be 2 members as minimum count, likewise, in an LLP there must be two members as minimum count.

  • How can we conduct a meeting for both firm Incorporation entities? (private and LLP companies)?

In case of LLP there are no such statutory requirements for holding the general and annual meeting. But in case of a company the directors should meet 4 times per a calendar year. The meeting gap should not exceed 120 days. In every year the company members and whole team conduct an annual meeting and everyone has to present in that meeting.

  • What is the minimum count of directors/ designated partners mandatory in an LLP as well as in a company or both firm Incorporation?

In a Pvt Ltd company, there should be two individual directors are necessary. Any one of them should be resident in India. In case of LLP there should 2 designated partners and 1 of them should be resident in India.

  • Who is considering as resident in India in case of firm Incorporation (LLP and Pvt Ltd) under the companies Act?

Based upon the companies Act 2013 the non-resident in India means one of the directors should stay In India more than 182 days in a financial year. Based on LLP the resident means a person who become stay in India more than 182 days and it is called financial year. The foreign national who satisfy such conditions are become a director or designated partner in a company.

Register your company in Coimbatore, and explore the legal facilities with no limitations. We Corpstore enables all types of company registration. Do let us know your feedback. We will waiting here to explore!!!

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