Guidance Tamil Nadu

FAQs

Starting your business

A foreign company can commence operations in India by incorporating a company under the Companies Act as a subsidiary (including a wholly owned subsidiary) or as a joint venture company.

Two routes of FDI: The automatic route (no prior approval is required) and the approval route.

For more information on the FDI policy visit: link 1 and link 2

Foreign Institutional Investors (FIIs), Non-Resident Indians (NRIs), and Persons of Indian Origin (PIOs) can invest in the primary and secondary capital markets in India through the portfolio investment scheme (PIS). Under this scheme, FIIs/NRIs can acquire shares/debentures of Indian companies through the stock exchanges in India. For more information on investment in Indian Companies by FIIs/NRIs/PIOs visit: Click Here

Standard Operating Procedure detailing the online application procedure, authority issuing approvals, timelines, documents required for FDI. Click Here

The Ministry of Corporate Affairs defines the different company structures based on its size/ number of members/ basis of control or liability/ ownership/ access to capital.

For more information check: Click Here

Considering the nature of investment, investment strategy most widely preferred route for investors is private limited company.

There are few differences between Private Ltd company and LLP viz, during the registration process a Pvt. Ltd will propose Directors while an LLP shall propose Partners. LLP incorporation fee, checklists of documents required are relatively lesser than Pvt Ltd company.

Further, limited liability companies enjoy the liability protections of a corporation as well as structural and tax advantages of a partnership. Significant difference between LLCs and LLPs is that LLPs must have at least one managing partner who bears liability for the partnership's actions.

--Partnership regulated under The Indian Partnership Act, 1932

A partnership is formed when two or more people start a business with a goal of making a profit.

Pros:

Easy to establish
Partnerships are 'pass through' entities, as in each partner individually pays taxes on their share of distributions

Cons:

Each partner is liable for the debts and obligations of the business
Profits must be shared
Personal disagreements can occur
General partnerships have limited ability to raise capital

--Limited Liability Company (LLC) regulated under The Limited Liability Partnership Act, 2008

Pros:

Limited liability for partners
No double taxation – earnings and losses pass on to the owners
No limit on number of shareholders
Any member or owner can be involved with the operations of the LLC (unlike a Limited Partnership)
Fewer filing and administrative requirements than a corporation

Cons:

LLCs have numerous regulatory and filing requirements than a sole proprietorship or partnership

--Corporation regulate under The Companies Act

Pros:

Liability protection for owners of the corporation
Personal assets of owners are not at risk to creditors
A corporation can retain profits without the owners paying tax
A corporation has higher capability to raise capital and offer different levels of stock

Cons:

Federal, state, and many local agencies monitor corporations and often have different regulatory requirements, ultimately increasing compliance costs.
Corporations often have higher overall tax rates
Shareholder dividends are not tax deductible for the corporation
Income is taxed twice – at the corporate tax rate and again at the individual income tax rate

The Ministry of Corporate Affairs website should be accessed for any details regarding company registration

For more information visit: Click Here

The Ministry of Corporate Affairs regulates corporate affairs through the Companies Act, 1956, 2013 and other allied Acts, Bills and Rules.

For more information visit: Click Here

Company name availability can be checked here: Click Here

The Ministry of Corporate affairs defines minimum and maximum number of directors and their age limits, manner of appointment, removal and resignation, mode of appointment, remuneration etc.

For detailed information check: Click Here

Once incorporation is complete a softcopy of the certificate is sent to the company, however, on request a hardcopy is issued by the Ministry of Corporate Affairs for a nominal fee. Click Here

FAQs

Starting your business

In what ways foreign investment can enter India and a foreign company invest in Indian company?

What are the different types of company structures and its Pros and Cons?

--Partnership regulated under The Indian Partnership Act, 1932

--Limited Liability Company (LLC) regulated under The Limited Liability Partnership Act, 2008

--Corporation regulate under The Companies Act

Which is the official site for information on company registration?

Which is the official site in India for accessing company register information?

What are the various requirements of the board of directors of Private limited company?

Will government issue certification/ license once company is registered?