Every business continues to explore various geographical segments to experiment with the strongly believed products, if we are talking about the fast growing economy, India is the land of opportunities, which is phenomenally pine. This article is crafted for all you NRI planning to start a business in India, have a clear and quick checklist of all the Legal and Accounting Compliance one may start planning for.
- Entity Types: You have two options, LLP and Pvt Lt company.
- Directors and Shareholders: it is not legally required that directors be residents of India, many service providers will recommend that the subsidiary initially have at least one local director and one local shareholders to efficiently complete the incorporation process. This structure avoids administrative time-delays, such as requirements that non-India residents have incorporation documents notarized in an Indian consulate in the United States(say), and enables the U.S. company to establish the subsidiary more quickly. Drafting a shareholder?s agreement for the same will not take more than 5 days.
- Incorporation: Having all the documents ready. Checking of name availability and name reservation. Prepare and file charter documents (Memorandum of Association and Articles of Association), with registration fee and stamp duty, Appointment of initial directors, Issuance of shares to initial shareholders, print share certificates, register company and pay registration and filing fees. Time consumed to incorporate the same will not exceed 30 days.
- FCGPR Compliance: Since Company will be one of the major shareholders and hence the initial capital comes from the Foreign Company, as per FEMA Act, FCGPR Compliance must be followed by the Subsidiary. RBI should be kept informed about the filing of FCGPR.
- Open bank account: Having a Current account for the subsidiary in India would be mandatory. This will not take more than 10 days.
- Operations related Compliance: Subsidiary company operational relationship must be carefully documented and monitored to maintain the separate legal status of each company. There must be intercompany and other agreements between the companies to have the intended effect for tax, isolation of liability and other business purposes. Drafting agreements covering the same would take a maximum of 7 days.
- Post Incorporation Registrations: Application for permanent account number and TAN. This will not take more than 20 days.
- Tax Registration: Registrations under the professional tax, sales tax and Shops and Establishment laws for your operations in India. This will not take more than 30 days. GST Registration depending on the busienss model.
- Currency Exchange Regulations: The government of India regulates the movement of funds out of India and approval may be required before cash may be transferred out of India. There is an exemption from the Indian currency restrictions for the exercise of stock options for employees based in India.
- Exporting- Importing Business: Approval of Customs Dept. for bond and facility license, and import/export codes. Ideally, the time consumed for this is 45 days. SIP Registration is optional.
- Intellectual Property Ownership: Intellectual property protection is implemented in India both by statutory compliance and by written agreement. Copyright and patent protection are the primary types of statutory protection. Trademark and service mark statutory protections also exist. Trade secret protection is implemented by agreement
- Employee Contracts: Agreements with employees (and contractors) need to be completely covering moral rights and other matters.
- R&D Agreement: There should be a research and development agreement between the U.S. company and the subsidiary.
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