Incorporation of Foreign Company from India
Updated: Nov 13, 2021
A ‘company’ can be elucidated through the columns of Company’s Act 2013, as an organization consolidated under the prescribed act or preceding laws, most specifically within the geographic boundaries of the Indian subcontinent. Consolidation or in other words, the incorporation of a foreign company will require an understanding of what a foreign company is!
A foreign company can be elaborated via the literal meaning as a company in a foreign land other than India but has a place of business (as provided in the bonafide certificate while registration) in India via direct or indirect means.
When more than half of the paid-up share capital of the foreign company is held by the company in India, the foreign-based corporation will automatically be deemed as an overseas subsidiary company of the Indian company. In an alternative scenario, when all the share capital is held by the Indian company, the foreign company incorporated will be deemed as a wholly-owned subsidiary where the Board of Directors is fully controlled by the company on Indian waters.
The incorporation of a foreign company could be extremely tedious and cumbersome however if the intent for a foreign consolidation is strong, the benefits have the potential to outweigh the cons.
A foreign company can allow magnanimous expansion of markets and customer base from one country to around the world and remain highly accessible to potential customers too.
The brand expands as there is more knowledgeable customers and high probability of profitable business deals within the respective macro environments.
Expansion of markets opens doors for heavy competition and puts the company’s strong workforce to a test the survive and thrive in the competitive markets. Competition allows the company to pave ways for more research and development which could prove beneficial in the foreseeable future.
Incorporating a company in the United States of America is one among the biggest platforms a company can achieve in their expansion goals as The States is known for providing unmatchable recognition for the brand and widest market for products and services.
Setting up a company in the United States can be exercised without having to physically travel across, saving time, effort, and money. Being a company incorporated in the leading economy of the world can be no less than a blessing!
STEPS TO INCORPORATE A COMPANY IN THE UNITED STATES:
Setting a foreign company requires a clear understanding and informed decisions about whether to begin a corporation of a limited liability company, based on the mode of operations, source of share capital, the intent of owners, and nature of business. The United States is a vast continent, therefore scrutinizing state laws for incorporation will allow the Indian owners to choose a state where it is relatively easier to incorporate due to flexible rules and regulations and less-cumbersome procedures. The aforementioned decisions on the type of incorporation and place are vital to begin the process of setting up the company.
The process can be crunched into 4 small steps, but it must be noted that particular states within the USA will have slightly varied rules as per their respective state laws.
1. Name of the company is an inevitable step in setting up any company. Depending on whether the company is a partially or wholly-owned subsidiary the name can be chosen. Before finalizing the name, it must be verified that it is unique and different from the existing companies in the locality.
2. Since the company is being set up in the USA without anybody traveling for the procedures from India, there will be an absence of a person capable to sign documents and tangibly be present at the incorporation office in The States when required. To overcome this obstacle a registered agent must be hired who has a verified address in the same locality as where you intend to form the company. The agent will be responsible for reporting to legal offices to sign documents when required.
3. Lodge an application for a federal employer identification number, which stands as an identification for the business entity as a functioning corporation or LLC generating revenue through their operations. Though the procurement of this number is at the discretion of the company, it is highly recommended in order to ease procedures while setting up a bank account for the company in The United States (which is vital for carrying out business transactions).