India Entry Strategy
Enter India
Get professional help from Srisattva Group
Setting business in India
Information with regard to limited liability partnership agreement and changes, if any, made therein
1. Indian Company*
- Wholly Owned Subsidiary JV/ Wholly Owned Subsidiary as –
- Private Limited or
- Public Limited Company, subject to Indian Companies Act, 2013
2. Foreign Company**
- Liaison Office: To represent the parent company in India.
- Branch Office: To undertake activities such as Export, Import, research, consultancy etc.
- Project Office: Activities as per contract to execute project
3. Limited Liability Partnership
- LLP: Subject to provisions of LLP
- Act, 2008: FDI permitted under automatic route in LLPs operating in sectors / activities where 100% FDI is allowed, through the automatic route and there are no FDI-linked performance conditions***
* Incorporation of a company in India is subject to sectoral caps and requisite approvals
**RBI guidelines regarding the establishment of LO / BO / PO. As per Indian Companies Act 2013, only a resident Indian with PAN to be appointed for receiving notices in India for foreign company.
***For FDI-linked performance conditions, please refer Consolidated FDI Policy.
Types of business establishments in India
| FACTORS OF COMPARISON | PRIVATE | PUBLIC | OPC | LLP |
|---|---|---|---|---|
| MIN MEMBERS | 2 | 7 | 1 | 2 Partners |
| MAX MEMBER | 200 | Unlimited | 1 | No Limit |
| MIN DIRECTORS | 2 | 3 | 1 | 2 Designated Partner |
| MAX DIRECTORSS | 15* | 15* | 15* | NA |
*Company may appoint more than fifteen directors after passing a special resolution, further provided that such class or classes of companies as may be prescribed, shall have at least one woman director (Rule 3 of The Companies (Appointment and Qualification of Directors) Rules, 2014)
| RESIDENT DIRECTOR | 1 Mandatory | 1 Mandatory | 1 Mandatory | 1 Designated Partner |
|---|---|---|---|---|
| MINIMUM CAPITAL | No minimum requirement | No minimum requirement | No minimum requirement | No minimum requirement |
| REGULATOR | Registrar of Companies | Registrar of Companies | Registrar of Companies | Registrar of Companies |
| CREDIBILITY | High | High | Medium | Medium |
| INVESTOR PREFERENCE | High | High | Low | Medium |
| TAXATION | 30% plus surcharge if applicable plus cess | |||
| CONVERSION | Can be converted into LLP | Can be converted into LLP | Cannot be converted before 2 years | Cannot be directly converted into a Private Limited Company |
| TRANSFER OF OWNERSHIP | Ownership can be transferred | Ownership can be transferred | Ownership can be transferred to nominee in the event of death of owner | Ownership can be transferred |
| SUBSCRIPTION OF SHARES | Public subscription not allowed | Public subscription not allowed | Public subscription not allowed | Public subscription not allowed |
| ISSUE OF PROSPECTUS | Not Mandatory | Mandatory In case of public issue | Not Mandatory | Not Mandatory |
| MANAGERIAL REMUNERATION | No limit for managerial personnel | Shareholder approval is required, if remuneration payable is above limits | NA | Remuneration is based on LLP agreement & Sec 40a |
| LEGAL STATUS | Private Company is a separate legal entity registered under Indian Companies Act, 2013. The directors are liable for defaults made under the Act. | Public Company is a separate legal entity registered under Indian Companies Act, 2013. The directors are liable for defaults made under the Act. | OPC is a separate legal entity registered under Indian Companies Act, 2013. The directors are liable for defaults made under the Act. | LLP is a separate legal entity registered under Indian LLP Act, 2008. The designated partners of LLP are liable for contraventions under the Act. |
| GOVERNING ACT / LAW | Indian Companies Act, 2013 | Indian Companies Act, 2013 | Indian Companies Act, 2013 | LLP Act, 2008 |
| ANNUAL STATUTORY FILINGS | Annual statement of accounts & annual return with ROC in e-Form AOC-4, e-Form AOC-4-XBRL & e-Form MGT-7 | Annual statement of accounts & annual return with ROC in e-Form AOC-4, e-Form AOC-4-XBRL & e-Form MGT-7 | Annual statement of accounts & annual return with ROC | Annual statement of solvency & annual return with ROC in e-Form 8 & e-Form 11 |
| ANNUAL FILINGS & AUDIT | IT return to be filed. Audit mandatory | IT return to be filed. Audit mandatory | IT return to be filed. Audit mandatory | IT return to be filed. Audit mandatory in case turnover exceeds INR 40 lakhs or contribution exceeds INR 25 lakhs |
| BASIC REGISTRATION | The following registrations / approvals will be required: PAN TAN GST Profession Tax Company Tax Import Export Code EPF ESI |
The following registrations / approvals will be required: PAN TAN GST Profession Tax Company Tax Import Export Code EPF ESI |
The following registrations / approvals will be required: PAN TAN GST Profession Tax Company Tax Import Export Code EPF ESI |
The following registrations / approvals will be required: PAN TAN GST Profession Tax Company Tax Import Export Code EPF ESI |
| STATUTORY AUDIT | Financials would be liable to Statutory Audit by a Chartered Accountant | Financials would be liable to Statutory Audit by a Chartered Accountant | Financials would be liable to Statutory Audit by a Chartered Accountant | Financials would be liable to Statutory Audit by a Chartered Accountant in case turnover exceeds INR 40 lakhs or contribution exceeds INR 25 lakhs |
| INTERNAL AUDIT | Applicable subject to paid up capital, turnover, borrowings and deposits. | Applicable subject to paid up capital, turnover, borrowings and deposits. | Applicable subject to paid up capital, turnover, borrowings and deposits. | NA |
| TAX AUDIT | Applicable in case of turnover exceeding Rs. 10 million. Non Compliance would result into a penalty @ 0.5 % of the total turnover or Rs. 0.1 million whichever is less. | Applicable in case of turnover exceeding Rs. 10 million. Non Compliance would result into a penalty @ 0.5 % of the total turnover or Rs. 0.1 million whichever is less. | Applicable in case of turnover exceeding Rs. 10 million. Non Compliance would result into a penalty @ 0.5 % of the total turnover or Rs. 0.1 million whichever is less. | Applicable in case of turnover exceeding Rs. 10 million. Non Compliance would result into a penalty @ 0.5 % of the total turnover or Rs. 0.1 million whichever is less. |
| GST AUDIT | Applicable in case of turnover exceeding Rs. 20 million. | Applicable in case of turnover exceeding Rs. 20 million. | Applicable in case of turnover exceeding Rs. 20 million. | 30% plus surcharge if applicable plus cess |
| TRANSFER PRICING | Applicable | Applicable | Applicable | Applicable |
Commencing business in India as LO / BO / WOS
| Liaison Office (LO) | Branch Office (BO) | Wholly Owned Subsidiary (WOS) |
|---|---|---|
| A Liaison Office [also known as representative office] can undertake only liaison activities i.e. it can act as a channel of communication between Head Office abroad and parties in India. It is not allowed to undertake any business activity in India and cannot have any income in India. | Companies incorporated outside India are allowed to setup Branch Offices with specific approval from Reserve Bank of India. Normally, the Branch Office should be engaged in the activity of the Parent Company. | An incorporated entity formed and registered under the Companies Act, 2013. It is a distinct legal entity, apart from its shareholders. |
| 1. An extension of the Head Office 2.It is a simple form of structure 3.No separate legal standing of its own |
1. An extension of the Head Office 2.It is a simple form of structure 3.No separate legal standing of its own |
1.Company form of organization 2.Separate legal entity 3.Limited Liability |
| 1. Representing the parent company / group companies in India 2.Promoting export / import from / to India 3.Promoting technical / financial collaborations between parent / group companies and companies in India 4.Acting as a communication channel between the parent company and Indian companies |
1. Export / import of goods 2.Rendering professional or consultancy services 3.Carrying out research work in which the parent company is engaged 4.Promoting technical or financial collaborations between Indian companies and parent or overseas group company 5.Representing the parent company in India and acting as buying / selling agent in India 6.Rendering services in Information Technology and development of software in India 7.Rendering technical support to the products supplied by parent / group companies 8.Foreign airline / shipping company |
As per its ‘main objects’ stipulated in the Memorandum of Association subject to Foreign Direct Investment Policy stipulated by the Government of India. |