Indian Subsidiary

Yes, a foreign company or foreign national can own or start a business in India by acquiring equity shares of the company. Investment in a Company can be under two routes, automatic route or Government approval route. The automatic route requires no requirement of any prior regulatory approval for investment in equity shares of an Indian business and is allowed in most of the businesses.

For a foreign national or foreign company to start a Company in India, the foreign National must have an address for Registered Office in India and one Director on the board, who will be a Indian Citizen and Indian Resident.

Yes, a NRI or Foreign National can be a Director in a Private Limited Company after obtaining Director Identification Number. However, at least one Director on the Board of Directors must be a Resident India.

Yes, NRIs / Foreign Nationals / Foreign Companies can hold shares of a Private Limited Company subject to Foreign Direct Investment (FDI) Guidelines.

100% Foreign Direct Investment is allowed in India in many of the industries under the Automatic Route. Under the Automatic Route, only a post-investment filing is necessary with the RBI indicating the nature of investment made. There are a few industries that require prior approval from the RBI, in such cases, approval must first be obtained from RBI prior to investment.

A private limited company or limited company type of business constitution is most suitable for foreign investment in India. Investment of foreign funds in other types of business entity like proprietorship, partnership and limited liability partnership require RBI prior approval. Foreign company or foreign nationals are not allowed to be Director or Nominee Director in a One Person Company.

If a foreign national is on the Board of Directors, then a copy passport along with copy of address proof that is apostilled by the Indian Embassy or a Notary will be required. In addition, the witness of the MOA and AOA documents would have to be a Notary or the Indian Embassy. If the shares of the Indian Company would be owned by a Foreign Company, then a Board of Resolution also needs to be passed by the foreign company for acquiring shares in the Indian company.

Foreign investment in any form is prohibited in businesses engaged or proposes to engage in the following business: I) Business of chit fund; or, ii) Nidhi Company; or, iii) Agricultural or plantation activities (excluding floriculture, horticulture, development of seeds, animal husbandry, pisciculture, cultivation of vegetables, mushrooms, etc., under controlled conditions, services related to agro & allied sector and tea plantations); or, iv) Real Estate business, or construction of farm houses (Does not include development of townships, construction of residential / commercial premises, roads or bridges); or, v) Trading in Transferable Development Rights (TDRs).

Yes, after incorporation of the Company and flow of equity fund into the Company from foreign source, Reserve Bank of India must be notified about the foreign investment in the Company through proper filing. In case the activity performed by the business requires Government approval for Foreign Investment, approval must be obtained prior to the funds being invested in the company.

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