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Frequently Asked Questions

Can a Foreign company or Foreign national own or start a business in India?

Yes, a foreign company or foreign national can own or start a business in India by acquiring equity shares of the company. Investment in a Company can be under two routes, automatic route or Government approval route. The automatic route requires no requirement of any prior regulatory approval for investment in equity shares of an Indian business and is allowed in most of the businesses.

What are the requirements for starting a business in India?

For a foreign national or foreign company to start a Company in India, the foreign National must have an address for Registered Office in India and one Director on the board, who will be a Indian Citizen and Indian Resident.

Can Foreign Nationals be a Director in a Private Limited Company?

Yes, a NRI or Foreign National can be a Director in a Private Limited Company after obtaining Director Identification Number. However, at least one Director on the Board of Directors must be a Resident India.

Can Foreigners hold shares of a Private Limited Company?

Yes, NRIs / Foreign Nationals / Foreign Companies can hold shares of a Private Limited Company subject to Foreign Direct Investment (FDI) Guidelines.

What are FDI Guidelines for Foreign Nationals in a Private Limited Company?

100% Foreign Direct Investment is allowed in India in many of the industries under the Automatic Route. Under the Automatic Route, only a post-investment filing is necessary with the RBI indicating the nature of investment made. There are a few industries that require prior approval from the RBI, in such cases, approval must first be obtained from RBI prior to investment.

Which business entity is suitable for Foreign Investment?

A private limited company or limited company type of business constitution is most suitable for foreign investment in India. Investment of foreign funds in other types of business entity like proprietorship, partnership and limited liability partnership require RBI prior approval. Foreign company or foreign nationals are not allowed to be Director or Nominee Director in a One Person Company.

What are the documents required for Foreign National during Registration?

If a foreign national is on the Board of Directors, then a copy passport along with copy of address proof that is apostilled by the Indian Embassy or a Notary will be required. In addition, the witness of the MOA and AOA documents would have to be a Notary or the Indian Embassy. If the shares of the Indian Company would be owned by a Foreign Company, then a Board of Resolution also needs to be passed by the foreign company for acquiring shares in the Indian company.

What are businesses in which foreign nationals or companies can't invest?

Foreign investment in any form is prohibited in businesses engaged or proposes to engage in the following business: I) Business of chit fund; or, ii) Nidhi Company; or, iii) Agricultural or plantation activities (excluding floriculture, horticulture, development of seeds, animal husbandry, pisciculture, cultivation of vegetables, mushrooms, etc., under controlled conditions, services related to agro & allied sector and tea plantations); or, iv) Real Estate business, or construction of farm houses (Does not include development of townships, construction of residential / commercial premises, roads or bridges); or, v) Trading in Transferable Development Rights (TDRs).

Are there any further regulatory requirements after incorporated Company?

Yes, after incorporation of the Company and flow of equity fund into the Company from foreign source, Reserve Bank of India must be notified about the foreign investment in the Company through proper filing. In case the activity performed by the business requires Government approval for Foreign Investment, approval must be obtained prior to the funds being invested in the company.

What comes as a part of the Legal Documents Library?

Basic legal documents like Employment Letter, Legal Notice, Non Disclosure Agreement, Terms of Service and Privacy Policy etc. are a part of the Legal Documents Library.

More Questions?

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With the rapid globalization, India is opening its doors to FDI. Many foreign companies intend to open their subsidies in India to expand their business. is an online platform through which the foreign companies can incorporate their wholly owned subsidy in India. Our team of qualified professionals, company secretaries and charted accountants are always at your service to handle all the matters relating to incorporation and registration of any foreign company’s wholly owned subsidy in India and putting you and your company at ease. Through LegalWiz you can get your foreign owned subsidy registered online by following certain quick and easy steps. Subject matter experts are available on call or via email to answer your queries. We also provide a full spectrum of post registration services related to SSI/MSME Registration, GST Registration, Trademark Registration, Copyright Registration, Bookkeeping, Legal Drafting, Accounting, Import Export Code registration etc. We offer services through an online model and a network of trusted affiliates across all major cities in India including Mumbai, Delhi, Ahmedabad, Pune, Bangalore, Hyderabad, Vadodara, Kolkata, Chennai, Noida, Gurgaon, Surat, Rajkot and others.

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