Registration of Private Company in India by NRI

Private Ltd Reasons to choose Prerequisites FEMA Regulations Schedule 4 Process FAQs

In case of the ‘Non-resident Indian’ (NRI), and Overseas Citizens of India (OCI), the Private Limited Company registration in India could be considered as the ideal kind of business that could be registered in India.

Reasons for choosing Private Limited Company registration in India by an NRI or OCI

A Private limited company can be started with as less as two shareholders.
Private limited companies are seen as particularly ideal for non-Resident Indians due to the nature of its legal and capital requirements.
Compliance of a private limited company is much simpler compared to that of a Public limited company.
There is no requirement of prior approval from the Government or the Reserve Bank of India for directing foreign investments into a private limited company.

Pre requisites for Private Limited Company registration in India

2 directors
2 shareholders
An office address in India. (one of the directors must be an Indian Resident)
For becoming a director of an Indian Company one should obtain Directors Identification Number (DIN) and Digital Signature Certificate (DSC). Most of the forms filed with the Registrar of Companies (ROC) must be signed with the DSC.
In order to register a Private Limited Company or Public Limited Company by an NRI, the identity proof, address proof as well as documents regarding Indian origin are required. Every one of these documents is required to be attested through the Indian embassy or notary public.

FEMA Regulations for NRI and OCI for Company registration in India

To ease investment in India, the government permitted NRIs as accepted entities for investment as per the Regulations notified under Foreign Exchange Management Act, 1999.
NRIs as per current FDI/FEMA legislation in India includes persons who are resident outside India but are citizens of India or are persons of Indian origin.
NRIs can invest in India either by purchasing shares of an Indian company or investing in the capital of any existing entity or by registering a new business in the country.
The FEMA regulations for NRIs an OCI wanting to invest and register a company in India are described in Schedule 4 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017.

SCHEDULE 4 OF FOREIGN EXCHANGE MANAGEMENT (TRANSFER OR ISSUE OF SECURITY BY A PERSON RESIDENT OUTSIDE INDIA) REGULATIONS, 2017 IN DETAILS BELOW:

Schedule 4

Investment on non-repatriation basis

Purchase or Sale of Capital Instruments or convertible notes of an Indian company or Units or contribution to the capital of an LLP by Non-Resident Indian (NRI) or Overseas Citizen of India (OCI) on Non-Repatriation basis
Purchase/ sale of capital instruments or convertible notes or units or contribution to the capital of an LLP

(1) A Non-resident Indian (NRI) or an Overseas Citizen of India (OCI), including a company, a trust and a partnership firm incorporated outside India and owned and controlled by NRIs or OCIs, may purchase/ contribute, as the case may be, on non-repatriation basis the following:

Any capital instrument issued by a company without any limit either on the stock exchange or outside it.
Units issued by an investment vehicle without any limit, either on the stock exchange or outside it.
The capital of a Limited Liability Partnership without any limit.
Convertible notes issued by a startup company in accordance with these Regulations.

(2) The investment detailed at sub-para 1 above will be deemed to be domestic investment at par with the investment made by residents

Prohibition on purchase of capital instruments of certain companies.

Notwithstanding anything contained in paragraph 1, an NRI or an OCI including a company, a trust and a partnership firm incorporated outside India and owned and controlled by NRIs or OCIs, shall not make any investment, under this Schedule, in capital instruments or units of a Nidhi company or a company engaged in agricultural/ plantation activities or real estate business or construction of farm houses or dealing in Transfer of Development Rights.

Explanation: Real estate business will have the same meaning as laid down in regulation.

Mode of Payment

The amount of consideration shall be paid as inward remittance from abroad through banking channels or out of funds held in NRE/ FCNR(B)/ NRO account maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016.

Sale/ maturity proceeds.
The sale/ maturity proceeds (net of applicable taxes) of capital instruments purchased or disinvestment proceeds of a LLP shall be credited only to the NRO account of the investor, irrespective of the type of account from which the consideration was paid;
The amount invested in capital instruments of an Indian company or the consideration for contribution to the capital of a LLP and the capital appreciation thereon shall not be allowed to be repatriated abroad.
Investment in a firm or a proprietary concern
Contribution to capital of a firm or a proprietary concern

An NRI or an OCI may invest, on a non-repatriation basis, by way of contribution to the capital of a firm or a proprietary concern in India provided such firm or proprietary concern is not engaged in any agricultural/ plantation activity or print media or real estate business. Explanation: Real estate business will have the same meaning as laid down in regulation 16.

Mode of payment

Sale/ maturity proceeds
The disinvestment proceeds shall be credited only to the NRO account of the person concerned, irrespective of the type of account from which the consideration was paid;
The amount invested for contribution to the capital of a firm or a proprietary concern and the capital appreciation thereon shall not be allowed to be repatriated abroad.

Process of Company registration in India by an NRI or OCI

Registration of a Private Limited company in India is complete an online process. Recently the MCA has replaced the earlier SPICe form with a new web form called SPICe+ (SPICe Plus). Hence, Incorporating a Private Limited Company is even easier now.

Now you can Incorporate a Private Limited Company, with a Single application for Name reservation, Incorporation, DIN allotment, Mandatory issue of PAN, TAN, EPFO, ESIC, Profession Tax (Maharashtra), and Opening of Bank Account.

SPICe+ is divided in two parts

Part A: Apply for the name reservation of the company in Part A of the form Spice+. it can be used for taking the name approval of the proposed Company and also for filing Company registration in one go.

Part B: In Part B of the Form Spice+, apply for the following services.

Incorporation
DIN allotment
Mandatory issue of PAN
Mandatory issue of TAN
Mandatory issue of EPFO registration
Mandatory issue of ESIC registration
Mandatory issue of Profession Tax registration(Maharashtra)
Mandatory Opening of Bank Account for the Company and
Allotment of GSTIN (if so applied for)

You may either choose to submit Part-A to reserve a name first and then submit Part B for incorporation & other services or you can File Part A and B together at one go for incorporating a new company

Documents required for Company registration in India by Non Resident Indians (NRI)

Nationality	NRI	OCI
Proof of Nationality	PAN Card	PAN CardPAN Card Undertaking
Identity Proof	Passport	Passport
Residence Proof	Electricity BillBank StatementDriving License	Electricity BillBank StatementDriving License
Registered office Proof	Electricity billGas BillWater BillPostpaid Telephone or Mobile BillNOC from the owner of the premise	Electricity billGas BillWater BillPostpaid Telephone or Mobile BillNOC from the owner of the premise
In Case of Signing from India	–	Business Visa or OCI Card
In Case of Signing from outside India	All the documents need to be apostilled and notarized including MOA, AOA, Director’s Identity and Address Proof, PAN Undertaking from Appropriate Authority.	All the documents need to be apostilled and notarized including MOA, AOA, Director’s Identity and Address Proof, PAN Undertaking from Appropriate Authority.

FAQs

1. Are foreign nationals required to obtain a PAN before incorporating a company in India?

A company is a separate legal entity. Therefore, it needs to have its own Permanent Account Number (PAN) for the purposes of calculating Income tax liabilities. A Tax Deduction and Collection Account Number (TAN) number is used by companies that reduce TDS (Tax Deducted at Source) while making payments.

2. Can all the directors of a company incorporated in India be foreign nationals?

According to Companies Act 2013 there must be at least 1 Resident Director in the Board of an Indian Company. Resident director is defined as a citizen of India who has resided in India for at least 180 days in a calendar year.

3. Is there a minimum capital requirement for an NRI to start a company in India?

There is no minimum required share capital that an NRI is required to invest in a company in India.

4. Can a non-resident invest in India?

A non-resident entity can invest in India, subject to the FDI Policy except in those sectors/activities which are prohibited. However, an entity of a country, which shares a land border with India or where the beneficial owner of investment into India is situated in or is a citizen of any such country, can invest only under the Government route. Further, a citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the Government route, in sectors/activities other than defense, space, atomic energy and sectors/activities prohibited for foreign investment.

5. What should be done after investment is made under the Automatic Route or with Government approval?

A two-stage reporting procedure has been introduced for this purpose. On receipt of money for investment: Within 30 days of receipt of money from the foreign investor, the Indian company will report to the Regional Office of RBI under whose jurisdiction its Registered Office is located, a report containing details such as: Name and address of the foreign investors Date of receipt of funds and their rupee equivalent Name and address of the authorized dealer through whom the funds have been received, and Details of the Government approval, if any; On issue of shares to foreign investor: Within 30 days from the date of issue of shares, a report in Form FC-GPR together with the following documents should be filed with the Regional Office of RBI: Certificate from the Company Secretary of the company accepting investment from persons resident outside India certifying that: All the requirements of the Companies Act, 1956 have been complied with; Terms and conditions of the Government approval, if any, have been complied with; The company is eligible to issue shares under these Regulations; and The company has all original certificates issued by authorised dealers in India evidencing receipt of amount of consideration; Certificate from Statutory Auditors or Chartered Accountant indicating the manner of arriving at the price of the shares issued to the persons resident outside India.