Entity Formation & Setup in India

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Company Formation in India

Businesses are looking to incorporate companies in India more and more with the current booming economy.

However, legal complexity, recent tax reform, and foreign trade barriers pose a challenge for company formation in India.

NNRoad’s team of experts guides firms through the complex incorporation process, minimizing risks for smooth market entry.

Below there are the most common types of entities in India:

  • Limited Liability Partnership - A Limited Liability Partnership (LLP) is governed by the Limited Liability Partnership Act 2008. Limited Liability partnership provides the advantage of limited liability to its owners and at the same time requires minimal maintenance. The ownership could be transferred easily to another person and there are no minimum capital requirements to be established. The director of a private limited company has limited liability to creditors. In case of default, banks/creditors can only sell the company’s assets and not the personal assets of directors.
  • Private Limited Company - A Private Limited Company (Pvt.Ltd) is a privately held small business entity and considered as an independent legal entity on incorporation. It has a minimum of 1 and can have a maximum of 50 shareholders. Unlike Public Limited Companies, Private Limited Companies cannot publicly trade its shares. It can have a minimum of 2 and a maximum of 15 directors.
  • Branch Office - Foreign companies engaged in manufacturing and trading activities abroad can set up Branch Offices in India. Branch Offices are not allowed to carry out manufacturing activities on their own but can subcontract those to an Indian manufacturer. Before commencing operations, the branch office requires approval from the Reserve Bank of India (RBI). Commercial activities of any nature are not allowed for a Branch Office.
 

Most Common Types of Entities in India

Limited Liability Partnership (LLP) Private Limited Company (Pvt.Ltd) Branch Office
Best for SMEs Small Businesses/Startups/Entrepreneur SMEs (manufacturing and trading activities)
Shareholders Min 2, Max Unlimited (at least one designated partner as Indian resident) Min 1, Max 50 Local or foreign parent company
Legal Entity Separate legal entity Legal entity No legal entity
Issuance of Shares The ownership can easily be transferred to another person Restricted stocks trade Local or foreign parent company
Liability Unlimited Limited Local or foreign
Administration Board of directors 2 Directors Min, Max 15 Local or foreign
 

NNRoad's Company Formation Solution Includes:

  • Confirmation of the selection of a business entity type (e.g. private limited company, limited liability partnership “LLP”, branch office, and liaison office).
  • Advise with initial capital amount and shareholding, if applicable.
  • Assistance with the selection and application of entity name.
  • Assistance with the identification of key persons in the entity (i.e. directors, officers, shareholders, and partners), if required.
  • Secure a director’s identification number (DIN) and digital signature; designated partner identification number in an LLP.
  • Apply and register with the Registrar of Companies (ROC).
  • Apply for a PAN Card for local income tax purposes.
  • Obtain TAN for all persons who are responsible for deducting tax at source (TDS) or who are required to collect tax at source (TCS).
  • Assistance with the drafting of charter documents such as the certificate of incorporation, Articles of Association (AOA), Memorandum of Association (MOA) and LLP agreement (for LLP).
  • Assistance with bank account opening.