Foreign Company

Foreign company” is defined in section 591 of the Companies Act and it means a company which is incorporated outside India and has established a place of business within India.Within 30 days of establishment of such place of business within India, the Foreign Company is required to submit documents/details under section 592. Alterations and changes in these documents/details are required to be notified within 30 days.A foreign company can commence operations in India in one of the many different legal forms:

1.  Wholly-Owned Subsidiary Company

Foreign companies can also set up wholly-owned subsidiary in sectors where 100% foreign direct investment is permitted under the FDI policy. A WOS can be formed either as a private or public company, limited by shares or guarantee, or an unlimited liability company. Most often due to the unique advantages Private Limited Company is the most preferred form for a WOS.

2.  Liaison Office

The Liaison Office can also be setup to establish business contacts or gather market intelligence to promote the products or services of the parent company. It cannot engage in revenue generating activities.

3.  Branch Office

Foreign companies are allowed to setup branch office in India after obtaining the requisite approval from the Reserve Bank of India (RBI). The general permission of RBI permits a Branch Office to conduct the activities such as export/Import of goods, rendering professional or consultancy services, carrying out research work, in which the parent company is engaged etc.

4.  Project Office

A foreign corporation, which has secured a contract from an Indian company to execute a project in India, is allowed to establish a Project Office in India, without obtaining prior permission from RBI.

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