To incorporate company in India, investors must decide well beforehand whom to designate as their representatives. But this entails selecting the correct business entity structure first before deciding who can incorporate a company. The good thing about company incorporation in India is that local and foreign investors can get involved. There are some terms though, mandated by law, that need to be followed.
Who Can Incorporate a Company Such As Private Limited Company?
A private limited company is the most popular choice for an incorporated company in India. Foreign investors may choose this business entity structure because there can be only two shareholders to start with. This choice is also popular because executives and staff can be hired later. When there are only two directors at the start who can incorporate a company, one director should be a citizen of India.
Who Can Incorporate a Public Limited Company in India?
For a public limited company, the minimum requirement is seven shareholders and three directors. One of these directors who can incorporate a company ought to be a resident of India at the time of incorporation. Statutory meetings need to be conducted and the Indian government has to be informed before anyone is appointed as a member of company management.
Set Up Representative Office If Unsure Who Can Incorporate a Company
Sometimes, businesspeople who belong to a parent company are unsure about the kind of company structure they prefer to set up in India. However, they may still want to establish a presence in the Indian market. If this sounds like your situation, you may need to set up a representative office at the start.
This entity is not allowed to engage in revenue-generating activities in India. But it can help the parent company to initiate some business activities such as promoting financial and technical collaboration with other India-based companies. This is a good idea if you are not 100% sure about the survival of your company because India is a new market for you.
You can depart from the representative office structure once you have decided that you and your co-investors are ready to incorporate a company. The new company can then engage in revenue-generating activities after incorporation.
If you want to know who can incorporate a company, think carefully about the business entity structure you prefer. If you want to put up a private limited company, this may benefit your shareholders and foreign investors significantly. True, there are other types of business entities which you can explore. But if the business opportunity will not last for a long time, the private limited company structure may be perfect. Timeliness is always a key factor in company incorporation.
If you intend to eventually offer shares of the company to the public, you must set up a public limited company instead. Because shares will be offered to the public, this kind of company will be listed on the stock exchange of India as well. Shareholders are free to transfer the shares they own to other individuals.
Some investors prefer to test the waters by putting up a representative office first in India. Though they won’t be able to bring in revenue this way, at least they will be able to learn how to do business in India first. Company incorporation follows after.
Companies such as 3E Accounting India can help you with your business incorporation needs. We can provide you with valuable and timely assistance for company incorporation. Take note, we may also offer you other business service needs such as accounting, auditing and taxation services, among many others. This may be of valuable help to you so that you can start competing soon enough in the Indian business arena. We are your preferred corporate service provider in India.