Company incorporation in India involves lot of documentation and is quite time consuming. Further, the time involvement and documentation part also depends upon whether the directors and shareholders are Indian Resident or also involved foreign nationals and Residents.
In case, the foreign entity hold more than 50% shares in the Indian company, Indian company would become subsidiary company of such foreign company in India.
Further, in case hundred percent or equivalent shares of Indian company is held by foreign company/parent company, such Indian company becomes wholly owned subsidiary of foreign company.
It may further be noted that subsidiary company registration in India is one of the most popular and preferable mode of entity registration by foreign companies in India. Typically, the legal status of such subsidiary company in India is that of an Indian company. Subsidiary company registration may takes place either in form of private limited company in India or public limited company.
In this write up, we would try to evaluate the total time involved in private limited company registration in India as well as time involved in post incorporation compliance.
1. Registration Procedure
Company registration in India usually takes about 18-20 working days from receipt of all the documents. However, in case of subsidiary company registration in India which involves foreign shareholders and foreign directors, this time increases substantially due to the fact that all the KYC and other documents which is required from foreign shareholders or foreign directors need to get signed, notarized and apostiled in home country i.e foreign country. This increase the time as getting aforesaid documents from foreign country consumes lot of time.
Following steps are involved in company incorporation In India:
a) Engaging a professional firm like CA/CS/Lawyer to assist in private limited company registration.
b) Entering into an agreement between the service provider and the parent holding.
c) Agreement between the parent company and the shareholders as well as the initial directors of the subsidiary company
d) Checking the availability of name for the company.
e) Applying to MCA/ROC for reserving a suitable name for the company.
f) Formulating and preparing the chartered documents of the subsidiary such as Memorandum of Association (MoA) and Articles of Association (AoA).
g) Appointing the Initial Directors of the company.
h) Filing the final incorporation form along with the appropriate stamp duty and registration fees.
i) Obtaining Certificate of Incorporation of the Company.
j) Issuing the shares to the initial shareholders in the subsidiary.
k) Preparing the minute book for the meetings.
l) Printing the share certificates.
2. Post Registration Procedure
Post company registration in India, following further procedures need to be completed.
1) Opening a bank account for the new company:
Nowadays, the name of the preferred bank is given at the time of applying for final company incorporation. Further, once the company is incorporated and final certificate of incorporation is granted, the newly registered company shall approach the preferred bank and its branch for completion of bank account opening formalities.
It involves approx… 10-12 working days from submission of application for getting bank account opened.
2) Registrations for taxes:
Every newly registered company are required to apply for PAN and TAN. This is nowadays applied along with final incorporation form and is received along with certificate of incorporation. Both PAN and TAN numbers are mentioned in the certificate of incorporation.
3) Registrations for Goods and Service Tax ; professional tax and Registration under Shops and Establishment laws:
Every newly registered company needs to also apply for GST registration in case the estimated sales or turnover is likely to exceed Rs 40 lac in a year. Further, in case such companies are involved in interstate trade or provision of services, then such companies need to apply for GST registration irrespective of their total turnover or receipts. Professional taxes are applicable in some states and union territories and its registration need to be applied for in each such state.Similarly, in some states it is compulsory to apply for shop and establishment registration before starting the business where as in other states, it is optional and at the discretion of the company.
All such registrations are completed within the 10-15 working days from the opening of bank account.
4) Import Export License:
In case the company is engaged in the business of import and/or export, before doing such business activity, it is mandatory to apply for Import Export Codes (IEC) from DGFT.
It normally takes 8-12 working days from filing online application and submission of all relevant documents.
5) Certificate of Commencement of Business
Post company registration in India, every company shall apply for certificate of commencement of business by filing necessary forms with ROC/MCA. Same needs to be applied on or before 180 days from date of incorporation. Failure to do so would involve substantial penalty and interest.
6) Reporting of FDI to RBI and issuance of shares
In case of subsidiary company registration in India, share subscription money received in Indian company’s bank account from foreign shareholders are considered as FDI and post receipt of such money, RBI compliance need to be done by way of filing form FCGPR in Single master form by login into RBI website. Further, shares need to be allotted and necessary forms need to be filed with ROC.
Also, RBI raises some queries relating to such FDI which needs to be replied from time to time before getting final approval letter.
It involves approx. 30-40 working days
From above, it may be inferred that private limited company registration in India, whether in form of subsidiary or normal private company, usually takes approximate 10-15 working days for completion of entire registration procedure. Further, this time may increase further in case any of the directors or shareholders are foreign national or foreign citizens.
However, post registration procedure may take approx. 15-20 working days for normal company and approx. 40-45 working days for subsidiary company.
Further, aforesaid timelines may also increase or decrease depending upon state to state in India.
We, at EzyBiz India provides complete hand holding to domestic and international clients in entire company registration procedure in India and also in all post incorporation procedures and compliances under various laws like Income Tax Filing, GST filing, ROC filing, FEMA/RBI compliance, Accounting and Payroll Outsourcing etc