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Forming a Company in India
The Companies Act of 1956 sets down rules for the establishment of both public and private companies. The most commonly used corporate form is the limited company, unlimited companies being relatively uncommon. A company is formed by registering the memorandum and articles of association with the State Registrar of Companies of the state in which the main office is to be located.
Foreign companies engaged in manufacturing and trading activities abroad are permitted by the Reserve Bank of India to open branch offices in India for the purpose of carrying on the following activities in India:
- To represent the parent company or other foreign companies in various matters in India, for example, acting as buying/selling agents in India, etc.
- To conduct the research work in which the parent company is engaged provided the results of the research work are made available to Indian companies;
- To undertake export and import trading activities;
- To promote possible technical and financial collaboration between Indian companies and overseas companies.
Application for permission to open a branch, a project office or liason office is made via the Reserve Bank of India by submitting form FNC-5 to the Controller, Foreign Investment and Technology Transfer Section of the Reserve Bank of India. For opening a project or site office, application may be made on Form FNC-10 to the regional offices of the Reserve Bank of India.
A foreign investor need not have a local partner, whether or not the foreigner wants to hold full equity of the company. The portion of the equity thus not held by the foreign invest can be offered to then public.