Company Registration in India: Incorporation and the NRI Investor Position

In outline: decide the structure and the shareholding, obtain a digital signature certificate for each person who will sign and a director identification number for each proposed director, apply to reserve a name, prepare the memorandum and articles, and file the incorporation application with the Registrar of Companies having jurisdiction over the intended registered office, together with identity and address proof for every subscriber and director, proof of the registered office and the applicable fees and State stamp duty. The Registrar issues a certificate of incorporation with the company's identification and tax numbers, after which a bank account is opened, subscription money brought in and the commencement declaration filed.

There is no single best structure; there is a structure that fits a given plan. A private limited company suits a business that intends to take outside investment, has more than one owner, or needs the credibility of a recognised corporate form. A limited liability partnership suits a professional or advisory practice with no intention of issuing equity, and generally carries a lighter ongoing filing burden. A one person company suits a sole founder who wants a corporate form. The choice is driven by who will own it, whether outside money is coming in, what the ongoing compliance appetite is, and how the business is expected to be sold or passed on.

Where all subscribers and directors are in India with current documents and digital signatures in hand, an uncomplicated incorporation is generally completed in a small number of working days once the name is reserved. Where a subscriber or director is abroad it takes longer, and the extra time is almost always in obtaining a digital signature certificate for a person outside India and in getting identity documents attested or apostilled, not in the Registrar's processing. Name rejection is the other common cause of delay. No dependable general figure can be given because processing times vary by jurisdiction and by the year.

Identity and address proof for every proposed shareholder and director, attested or apostilled where the person is abroad; photographs of the proposed directors; proof of the registered office address with a utility bill of recent date and, where the premises are not owned by the company, the owner's consent; two or three proposed names; the intended shareholding split; and digital signature certificates for those who will sign the electronic filings. The exact set depends on the structure chosen and on where the subscribers are.

Generally yes. Indian company law does not restrict who may promote or hold shares in a company by reference to where they live, and a person of Indian origin living abroad can ordinarily incorporate an Indian company. Two conditions attach in practice: the board must include at least one director who satisfies the residence requirement for the year, and money coming into India to fund the subscription falls within the exchange-control framework, which determines the route, the pricing and the reporting. Both are planned before filing rather than after.

Generally yes. Share ownership is not restricted by residence under company law. What is regulated is the investment itself where it is funded from outside India — the route by which it comes in, the manner in which shares are issued against it, the reporting that follows, and whether the holding is on a repatriable or a non-repatriable footing. Some activities are closed to investment from outside India, so the company's proposed business is checked against the framework in force before the shareholding is settled.

Yes. There is no residence condition on being a director, so a person living abroad can be appointed to the board and can hold most of the equity. The condition applies to the board as a whole: at least one director must have stayed in India for the period prescribed during the relevant year. That seat is commonly filled by a family member, a co-founder or a professional in India. It should not be treated as a formality, because the person accepting it takes on a director's duties and personal exposure.

Generally yes, subject to the exchange-control framework governing money entering India. Investment comes in under one of two broad routes — an ordinary route requiring no prior permission with reporting afterwards, or an approval route requiring permission before the investment is made. Which applies depends on the sector and in some cases on the investor's own country, and sectoral conditions are revised periodically. The other decision, made at the same time, is whether the investment is on a repatriable or a non-repatriable footing, because that determines what can be sent abroad on a later sale.

They describe different things. A person of Indian origin living abroad ordinarily incorporates an Indian company through the standard domestic route, with the exchange-control layer applying to the funding of the shares. A body corporate incorporated outside India is in a different position: it may set up an Indian subsidiary, or establish a branch, liaison or project office, and each of those runs through different approvals, permitted activities and reporting. Establishing which description actually applies is the first step, because it changes the structure, the timeline and the cost.

Usually not for the incorporation itself. Documents can be signed abroad and attested at an Indian mission or apostilled depending on the country, digital signature certificates can be obtained for signatories outside India, and verification can be completed remotely where the process permits. Where physical presence would otherwise be needed — in practice more often for banking than for the incorporation filing — a written authority given to someone in India, drafted for the specific acts and properly attested, is the usual answer.

It is a director who has stayed in India for the period the law prescribes during the relevant year. A company must have at least one. The requirement exists so that there is a director within the jurisdiction who can be reached and held answerable. It does not limit how much of the company an overseas shareholder can own, and it does not prevent an overseas person from also being a director. What it does mean is that the person filling the seat needs to be chosen with care rather than nominated for convenience.

There is no prescribed minimum paid-up capital for a private limited company, and the notion that a fixed sum is required is a common misconception carried over from an earlier position. What matters practically is that the capital stated in the constitutional documents is subscribed and actually brought in, and that the commencement declaration is filed once it has been. Where the money comes from outside India, the account it comes through and the reporting that follows matter more than the amount.

At minimum: an annual return and financial statements filed with the Registrar each year whether or not the company has traded, board meetings at prescribed intervals and an annual general meeting with minutes kept, statutory registers maintained at the registered office, tax filings, and reporting to the regulator where money has come from outside India. Changes to the registered office, the directors, the shareholding or the constitutional documents take effect through filings. Companies that stop filing accumulate consequences for the company and for the directors personally.

Shares are property and pass on death like other property, under the will if there is one and under the applicable succession law if there is not. The practical work is establishing the entitlement and having the company record the transmission in its register of members, which usually requires succession documentation and, in some situations, a grant from a court. Where the heir lives abroad, exchange-control questions also arise on the footing of the holding and on any later sale. The succession side is described on the wills, succession and probate pages.

A registered office is an address at which the company can receive communications, and residential premises are commonly used, particularly at the start. What is required is proof of the address, a utility bill of recent date, and the owner's consent where the premises are not owned by the company. Some activities need premises meeting particular conditions, and a later change of registered office — especially across State lines — is a filing exercise of its own, so it is worth choosing with some thought.

It does not quietly disappear. A registered company continues to owe annual filings whether or not it trades, and the accumulation of defaults has consequences for the company and for its directors. Where a business is not going to proceed, the orderly routes are to apply for dormant status where the company qualifies, or to close it through the strike-off or winding-up route appropriate to its circumstances. Simply abandoning it is the option that creates the most difficulty later.