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FAQS

01. How to start a business in India?

 
  • Through a company, limited by shares, wholly owned or a joint venture.
  • Or by starting a branch or trading office.
  • Or by appointing an agent.

 

02. Which is the best form of business organization?
  • A company limited by shares - because it is a distinct entity, has limited liability of the shareholders, has a perpetual existence, has transferability of shares, has an option to contribute in shares, can have a large capital base, is subject to discipline of law and gets  preferential treatment over other forms of business organization.

 

03. What are the types of Companies?

 
  • Public & Private Companies

 

04. What are the modes of formation of a company in India for a foreign business entity?

 
  • Incorporating a wholly-owned subsidiary (WOS)
  • Entering into joint venture with an existing Indian enterprise (JV)

 

05. What are the steps involved in incorporation of a company?

 
  • Processing of Director Identification Number (DIN) & application for Digital Signature
  • Filing of Form no. 1A for the name approval with the Registrar of Companies
  • Drafting of the Memorandum & Articles of Association of the Company
  • Filing Forms 1, 18 & 32 with the Registrar of Companies

 

06. What are the various registrations required after incorporation of a company?

 
  • Permanent Account Number (PAN) under Income Tax Act.
  • Tax Deduction Account Number (TAN) under Income Tax Act
  • Shop Act Registration
  • Professional Tax registration for company and directors
  • Service Tax, if applicable
  • Sales Tax, if applicable
  • Import – Export Code for import / export, if to be done

 

07. What is the minimum authorised and paid up capital requirement for a company?

 
  • For Private Company: INR 100,000
  • For Public Company: INR 500,000

 

08. What are the Memorandum and Articles of Association of the company?

 
  • Memorandum is the charter of the company. It contains name clause, registered office clause, object clause, liability clause and capital clause.
  • Articles of Association are rules, regulation and bye-laws for the general management of the company.

 

09. How many directors / members are required to form a company?

 
  • For Private Limited Company: Minimum 2 Directors / minimum 2 members
  • For Public Limited Company: Minimum 3 Directors / minimum 7 members

 

10. Who can make an investment in India?

 
  • A person resident outside India or an entity outside India can invest in equity shares or convertible debentures or convertible preference shares of an Indian company under Foreign Direct Investment (FDI) Scheme, subject to the Regulations.

 

11. What is the investment under automatic route and what formalities need to be completed after receipt of funds?

 
  • In majority of the sectors, FDI up to 100%, under the automatic route is allowed. Investment does not require prior approval either by Government of India (GOI) or Reserve Bank of India (RBI). Investors are only required to notify the Regional office of RBI within 30 days of receipt of inward remittances and file required documents with that office within 30 days of the issue and allotment of shares to the foreign investors. For details, please visit the government website www.dipp.nic.in

 

12. What is the exit route available for foreign investors?

 
  • Sale of the company through transfer of shares to any resident or non-resident.
  • Voluntary winding up of the company by the members with High Court order.
  • Clearing all liabilities & assets from the balance sheet & striking it off u/s 560 as a defunct company