NRI Opening Company in India | A Wholistic Guide for NRIs

If you are an NRI and you want to explore more business ventures, then there is an option that easily available for you. The process of NRI opening company in India might look a very heavy duty task. But actually it can be achieved with little efforts. Read further to know what are the 4 most important documents required by NRI Director. 

NRI Opening Company in India: Introduction

Business in South asia
NRI Companies in India

Even for people living abroad, they can handle a private company without actually having to travel back and forth recurrently. Depending upon the business necessities non-resident investors can opt for a specific legal entity, incorporate/register the same and join in the huge business opportunity in one of the fastest growing economies in the world.

Important Aspects for NRIs to set up business

In India mostly there are 5 types of Legal Incorporations:

  1. Sole Proprietorship Firm
  2. Partnership Firm
  3. One Person Company
  4. Limited Liability Partnership
  5. Private Limited Company

For most NRIs, option 4 and 5 is available. This is because in other alternatives they have to be an Indian Resident in order to operate the ventures. Hence, NRIs or Foreign Nationals have the most ideal form of establishing their incorporations. This is through Private Limited Companies and Limited Liability Partnership.

However, there is a very thin line of difference between a Pvt Ltd Company and Ltd Company. If the number of investors involved in the business is more than 7, then the foreign officials can be incorporated in the Limited Company. And the venture might have to raise equity funds from its shareholders. Also, Private Limited Companies can involve upto 200 shareholders while a limited company can have unlimited shareholders. 

Solutions and challenges faced by NRIs for Opening Company in India

At the initial stage there is a situation of stalemate in the legal proceedings. In other words, out of the above mentioned 5 options only 2 options are available for NRIs. This creates a position of dilemma as to actually go on the venture or not. Also, there is a definite predisposition while registering for a Pvt Ltd Company. There should be at least one Indian resident shareholder within a minimum of two shareholders. 

Other than this, the issue of locality and maintenance in order to register the business becomes a drawback. Certainly it’s because an NRI cannot travel back and forth from the foreign country to India. Hence, this is one of the most essential decisions which lead to the absence of NRI business in India.

NRI Opening Company in India
NRI Business in India

Along with this, the authorities address the issuance of the bills towards the NRI’s address. This makes it impossible to tackle dues to geographical issues.

  • To adopt a refined solution to these challenges, the Indian Government has established the technology of virtual directors and virtual office through which people living abroad can easily and efficiently communicate the setup of their ventures.
  • Also, the manifestation of the prerequisite of having an Indian resident shareholder is basically to keep a check and balance on the ground level work of the business. So, this can nonetheless go with the direction of the setting up of businesses.

Benefits for NRIs

  • Without a doubt we know that the NRI investments have boosted up the economy. Large inward remittances when mixed with technologies, skills and diverse perspective can result in a beneficial business for everyone. Hence, the Indian Government has made administrative reforms in order to attract NRIs starting business in India. These include subsidized electricity rates, cost free lands and even tax exemptions until the firm is at ease.
  • Furthermore, there is an availability of SPICe (Simplifies Proforma for incorporating Company Electronically) Form. This took place in the year 2018 to ease the process of business incorporations by availing a single registration form in order to apply for PAN, TAN and DIN.
  • The Government has also sorted the requirements of compliance with authorities like FEMA, FDI, RBU and Income Tax guidelines. As a result these instructions are comparatively less than with Indian citizens who want to set up their own businesses under the Private Limited Company or LLP. 
  • NRIs can also take advantages by opening an NRI bank account like NRE. It will help in transmitting the money online via versatile transfer services. So, you can repatriate your money back at any time possible. This method avoids high transfer fees and achieves a better exchange rate. 

Documents required: Before FEMA

Under the Schedule I of the provisions of Reserve Bank of India, one can notice that the investments in shares and debentures can be made by the NRIs will come under the Foreign Direct Investment. Before the origin of FEMA, FERA was the supervising authority which didn’t allow the subscription to Memorandum and Articles of Association without prior permission from the Reserve Bank of India.

Therefore, after the Indian Government repealed FERA, the new instructions permitted the investments by the NRI Opening Company in India in a more uncomplicated manner. Furthermore, to set up a business in the origin country, the NRI had to only present the following mentioned documents.

Documents required by NRI Opening Company in India: After FEMA

1. DSC (Digital Signature Certificate)

DSC of the directors. This is because the registration process can be easily done via online modes. The Indian legal provisions has authorized such a way. One can also renew it after its expiry. Also, there is fee payment through online mode in order to obtain this and the authorities issue it after 24 hours.

Digital signature
Documents Required: 1/4

2. DIN (Directors Identification Number)

It is the unique identification code which Central Government has to permit. Also the company must appoint to a person as the director of the company. To apply for it, one has to fill an online form (DIR 3), under Section 153 and 154 of the Companies Act, 2013. One has to digitally sign this form and the Company Secretary must attest it, after completing all the fee formalities. Therefore, it can only be attained after DSC is approved by the Government.

DIN-NRI OPening Compant in India
Documents Required: 2/4

3. MoA (Memorandum of Association)

MoA under form INC-33, AoA (Article of Association) under form INC-34 and SPICE form under form INC 32. One has to fill these in order to complete all the formalities. All these documents are electronic documents which are in accordance with the Companies Act, 2013 which provides a form of approval and understanding of the company before filing it for incorporation. 

law advisor india--Indian lawyers on call why only for NRIs
Documents Required: 3/4

4. PAN (Permanent Account Number), TAN (Tax Deduction and Collection Account Number)

This is used for the agenda of calculating tax liabilities and to reduce tax amounts while making payments. Hence, it is necessary to have that in order to avail the tax benefits that are especially made for the NRIs. TDS returns need to be filed on a quarterly basis after allotment of TAN.

Permanent Account Number- NRI Opening cOmpany in india
Documents Required: 4/4

Based on the nature of Industry, the company may apply for VAT registration and Service Tax registration. This is after filling prearranged forms and payment of requisite fees.

Documents required for DIN and DSC

  1. Photocopy of passport 
  2. Address proof like driving license, bank statement, and property tax payment receipt or electricity bills (should not be older than a year from the date of filing of incorporation forms)
  3. Latest photograph in JPG format
  4. Other details like occupation, email, mobile number and qualifications
  5. It is to be noted that the Consulate of Indian Embassy or Foreign Public Notary must attest these documents.

Details required for the name approval of the company

  1. Name of the company with alternatives
  2. Share Capital Amount
  3. Shareholding Ration between the promoters
  4. Details in a paragraph about the course of business
  5. Complete address of the Registered Office and nearest police station
  6. Photocopy of NOC (Non Objection Certificate) from the owner of the Registered Office
  7. Photocopy of the last Electricity Bill, Telephone Bill or Gas Bill of the Registered Office

Pre-requisites for NRI registering and Opening a company in India 

  1. Proper documents and KYC details along with the attestations of authorized notaries and consulates are a basic requirement before starting a business.
  2. One of the directors of the company should be the resident of India.
  3. Majorly, the Foreign Direct Limit should be the focal point while commencing a business venture. This is because if one includes sectors under the automatic route then one does not require prior permission from RBI.
  4. In a scenario where the targeted sector does not go along with the automatic route but comes under the 100% FDI route, then permission in prior is required from the Ministry of Central Government or RBI.

Incorporation of companies by NRIs

NRIs can opt between private companies and LLPs to set up their ventures. Different indian legal backgrounds govern both of these. The authorities have incorporated Private Companies through the way of Companies Act, 2013. LLPs are under the provisions of Limited Liability Partnership Act, 2008.

Apart from these legislations, NRIs should also focus on other related laws like Foreign Exchange Regulations or Income Tex Laws. Hence, both the types of companies are slightly different but one has to register both through online mode.

Process of Registration of a company

The Indian Government has recently formed some new regulations which will enhance the process of registration for NRI opening company in India more efficiently. The procedure is as follows:

  • Step 1: Decision of adapting the form of that particular business entity which suits best for the NRI himself. 
  • Step 2: The NRI applicant should posses a User Account of the MCA (Ministry of Corporate Affairs) Portal in India which will directly be helpful to start the registration process.
  • Step 3: One should send the Application for DSC . Or you can directly go to the required authorities like Indian Embassy of your own country.
  • Step 4: After the completion of document requirements, sign inside the account of MCA portal. Fill the name of the company form. Or after the account is set, you can also visit the required form through the link :
  • Step 5: Assign a name and make the changes accordingly. Make sure to submit the RUN form along and pay a fee of 1000 INR. Make sure to keep a unique name for the Central Registration Centre to sanction.
  • Step 6: Apply for DIN by filling the SPICE form.

After the complete authentication of all the above mentioned steps, a certificate of Incorporation as a proof will be sent. Hence, this way any NRI can be associate or founder of any Indian company. Moreover, one can also assign a Power of Attorney who will directly guide you as to what you require according the Indian legislations.

FAQ’s for NRI Opening Company in India

What are the Documents required by NRI Opening Company in India?

An NRI can Open Company in India with the following documents:
1. DSC (Digital Signature Certificate)
2. DIN (Directors Identification Number)
3. MoA (Memorandum of Association)
4. PAN (Permanent Account Number), TAN (Tax Deduction and Collection Account Number)

What are the shareholding obligations to be followed?

A Private Limited Company can have 2-200 shareholders out of which one should be an Indian resident. The incorporation of the Limited Company can be done if the investors are 7 to any number.

How are companies categorized for tax purposes in India?

Under the provisions of Income Tax Act, the companies can be divided under:
Domestic Companies in which the location of the company is in India wholly and is registered under the Companies Act of India
Foreign Companies are not registered under the Companies Act of India and are situated outside India.

What are the tax rates validated to a company in India?

For domestic companies (AY 2020-21) it is 25%, where the total turnover or gross receipt of the last year (2019-20) is not exceeding 400 Crore INR. Otherwise the tax rates are 30%

Can a NRI be a director in an Indian Company?

Yes, but there should be one director who is an Indian resident. 

Can a NRI be partner in a real estate company?

Yes, although the law confines the foreign investment by NRI through the way of capital to the firm.

Also Read: Bail in India | Types and Conditions for NRI | An Ultimate Guide to Bail in India

Also Read: How to sell property in India and bring money to USA | Guide for NRIs

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