Enter India

Get professional help from Pioneer One.

Setting business in India

Information with regard to limited liability partnership agreement and changes, if any, made therein

1. Indian Company*

Wholly Owned Subsidiary
JV/ Wholly Owned Subsidiary as –
1. Private Limited or
2. Public Limited Company, subject to Indian Companies Act, 2013

2. Foreign Company**

Liaison Office: To represent the parent company in India.
Branch Office: To undertake activities such as Export, Import, research, consultancy etc.
Project Office: Activities as per contract to execute project

3. Limited Liability Partnership

LLP: Subject to provisions of LLP.
Act, 2008: FDI permitted under automatic route in LLPs operating in sectors / activities where 100% FDI is allowed, through the automatic route and there are no FDI-linked performance conditions***

* Incorporation of a company in India is subject to sectoral caps and requisite approvals
**RBI guidelines regarding the establishment of LO / BO / PO. As per Indian Companies Act 2013, only a resident Indian with PAN to be appointed for receiving notices in India for foreign company.
***For FDI-linked performance conditions, please refer Consolidated FDI Policy.

Types of business establishments in India

Factors of Comparison	Private	Public	OPC	LLP
Min Members	2	7	1	2 Partners
Max Member	200	Unlimited	1	No Limit
Min Directors	2	3	1	2 Designated Partner
Max Directors	15*	15*	15*	NA
*Company may appoint more than fifteen directors after passing a special resolution, further provided that such class or classes of companies as may be prescribed, shall have at least one woman director (Rule 3 of The Companies (Appointment and Qualification of Directors) Rules, 2014)
Resident Director	1 Mandatory	1 Mandatory	1 Mandatory	1 Designated Partner
Minimum Capital	No minimum requirement	No minimum requirement	No minimum requirement	No minimum requirement
Regulator	Registrar of Companies	Registrar of Companies	Registrar of Companies	Registrar of Companies
Credibility	High	High	Medium	Medium
Investor Preference	High	High	Low	Medium
Taxation				30% plus surcharge if applicable plus cess
Conversion	Can be converted into LLP	Can be converted into LLP	Cannot be converted before 2 years	Cannot be directly converted into a Private Limited Company
Transfer of Ownership	Ownership can be transferred	Ownership can be transferred	Ownership can be transferred to nominee in the event of death of owner	Ownership can be transferred
Subscription of Shares	Public subscription not allowed	Public subscription not allowed	Public subscription not allowed	Public subscription not allowed
Issue of Prospectus	Not Mandatory	Mandatory In case of public issue	Not Mandatory	Not Mandatory
Managerial Remuneration	No limit for managerial personnel	Shareholder approval is required, if remuneration payable is above limits	NA	Remuneration is based on LLP agreement & Sec 40a
Commencement of Business / Operations	Declaration to be filed prior to commencement in e-Form INC-20A within 180 days from the date of incorporation	Declaration to be filed prior to commencement in e-Form INC-20A within 180 days from the date of incorporation	Declaration to be filed prior to commencement in e-Form INC-20A within 180 days from the date of incorporation	Immediately after obtaining certificate of incorporation
Legal Status	Private Company is a separate legal entity registered under Indian Companies Act, 2013. The directors are liable for defaults made under the Act.	Public Company is a separate legal entity registered under Indian Companies Act, 2013. The directors are liable for defaults made under the Act.	OPC is a separate legal entity registered under Indian Companies Act, 2013. The directors are liable for defaults made under the Act.	LLP is a separate legal entity registered under Indian LLP Act, 2008. The designated partners of LLP are liable for contraventions under the Act.
Governing Act / Law	Indian Companies Act, 2013	Indian Companies Act, 2013	Indian Companies Act, 2013	LLP Act, 2008
Annual Statutory Filings	Annual statement of accounts & annual return with ROC in e-Form AOC-4, e-Form AOC-4-XBRL & e-Form MGT-7	Annual statement of accounts & annual return with ROC in e-Form AOC-4, e-Form AOC-4-XBRL & e-Form MGT-7	Annual statement of accounts & annual return with ROC	Annual statement of solvency & annual return with ROC in e-Form 8 & e-Form 11
Annual Filings & Audit	IT return to be filed. Audit mandatory	IT return to be filed. Audit mandatory	IT return to be filed. Audit mandatory	IT return to be filed. Audit mandatory in case turnover exceeds INR 40 lakhs or contribution exceeds INR 25 lakhs
Basic Registration	The following registrations / approvals will be required: PAN TAN GST Profession Tax Company Tax Import Export Code EPF ESI	The following registrations / approvals will be required: PAN TAN GST Profession Tax Company Tax Import Export Code EPF ESI	The following registrations / approvals will be required: PAN TAN GST Profession Tax Company Tax Import Export Code EPF ESI	The following registrations / approvals will be required: PAN TAN GST Profession Tax Company Tax Import Export Code EPF ESI
Statutory Audit	Financials would be liable to Statutory Audit by a Chartered Accountant	Financials would be liable to Statutory Audit by a Chartered Accountant	Financials would be liable to Statutory Audit by a Chartered Accountant	Financials would be liable to Statutory Audit by a Chartered Accountant in case turnover exceeds INR 40 lakhs or contribution exceeds INR 25 lakhs
Internal Audit	Applicable subject to paid up capital, turnover, borrowings and deposits.	Applicable subject to paid up capital, turnover, borrowings and deposits.	Applicable subject to paid up capital, turnover, borrowings and deposits.	NA
Tax Audit	Applicable in case of turnover exceeding Rs. 10 million. Non Compliance would result into a penalty @ 0.5 % of the total turnover or Rs. 0.1 million whichever is less.	Applicable in case of turnover exceeding Rs. 10 million. Non Compliance would result into a penalty @ 0.5 % of the total turnover or Rs. 0.1 million whichever is less.	Applicable in case of turnover exceeding Rs. 10 million. Non Compliance would result into a penalty @ 0.5 % of the total turnover or Rs. 0.1 million whichever is less.	Applicable in case of turnover exceeding Rs. 10 million. Non Compliance would result into a penalty @ 0.5 % of the total turnover or Rs. 0.1 million whichever is less.
GST Audit	Applicable in case of turnover exceeding Rs. 20 million.	Applicable in case of turnover exceeding Rs. 20 million.	Applicable in case of turnover exceeding Rs. 20 million.	Applicable in case of turnover exceeding Rs. 20 million.
Transfer Pricing	Applicable	Applicable	Applicable	Applicable

Commencing business in India as LO / BO / WOS

Liaison Office (LO)	Branch Office (BO)	Wholly Owned Subsidiary (WOS)
Meaning
A Liaison Office [also known as representative office] can undertake only liaison activities i.e. it can act as a channel of communication between Head Office abroad and parties in India. It is not allowed to undertake any business activity in India and cannot have any income in India.	Companies incorporated outside India are allowed to setup Branch Offices with specific approval from Reserve Bank of India. Normally, the Branch Office should be engaged in the activity of the Parent Company.	An incorporated entity formed and registered under the Companies Act, 2013. It is a distinct legal entity, apart from its shareholders.
Constitution
An extension of the Head Office It is a simple form of structure No separate legal standing of its own	An extension of the Head Office It is a simple form of structure No separate legal standing of its own	Company form of organization Separate legal entity Limited Liability
Permitted Activities
Representing the parent company / group companies in India Promoting export / import from / to India Promoting technical / financial collaborations between parent / group companies and companies in India Acting as a communication channel between the parent company and Indian companies	Export / import of goods Rendering professional or consultancy services Carrying out research work in which the parent company is engaged Promoting technical or financial collaborations between Indian companies and parent or overseas group company Representing the parent company in India and acting as buying / selling agent in India Rendering services in Information Technology and development of software in India Rendering technical support to the products supplied by parent / group companies Foreign airline / shipping company	As per its ‘main objects’ stipulated in the Memorandum of Association subject to Foreign Direct Investment Policy stipulated by the Government of India.
Criteria for Set Up
Parent company should have a profit making track record during the immediately preceding three financial years in the home country. Net Worth of the parent company not less than USD 50,000 or its equivalent.	Parent company should have a profit making track record during the immediately preceding five financial years in the home country. Net Worth of the parent company not less than USD 100,000 or its equivalent.	A private company is required to be incorporated with a minimum authorised & paid up capital and minimum two subscribers. No requirement of track record of parent company as shareholder.
General Terms of Approval
Not to undertake any activity of a trading, commercial or industrial nature and not to enter into any business contracts in its own name without RBI’s prior permission. No commission / fees shall be charged or any other remuneration received / income earned by the office in India for the liaison activities / services rendered by it or otherwise in India. The entire expenses of the office in India will be met exclusively out of the funds received from head office through normal banking channels. The office in India shall not borrow or lend any money from/to any person in India without RBI’s prior permission.	Not to expand its activities or undertake any new trading, commercial or industrial activity other than that is expressly approved by the RBI. The entire expenses in India will be met either out of the funds received from head office through normal banking channels or through income generated by it in India. The Branch Office will not accept any deposits in India. The commission earned by the Branch Office from parties abroad for any agency business will be repatriated to India through normal banking channels. Not to undertake any retail trading activity. A Branch Office is not allowed to carry out manufacturing or processing activities in India, directly or indirectly.	A private company is required to be incorporated with a minimum paid-up capital and minimum two subscribers. Broadly, it: restricts the right to transfer its shares limits the number of its members (shareholders) to 200; prohibits any invitation to the public to subscribe for any of its shares or debentures; and; prohibits any invitation or acceptance of deposits from persons other than its members, directors or their relatives. Note: The conditions will be different for Public Limited Companies.
Time limit of approval
Normally 3 years from the date of approval	Normally 3 years from the date of approval	Until the company decides to close down
Basic Registration
The following registrations / approvals will be required: PAN TAN GST Profession Tax Company Tax Import Export Code EPF ESI	The following registrations / approvals will be required: PAN TAN GST Profession Tax Company Tax Import Export Code EPF ESI	The following registrations / approvals will be required: PAN TAN GST Profession Tax Company Tax Import Export Code EPF ESI MSME Registration
Liabilities of parent company / Head office
Parent company’s liability is unlimited for all acts and omission of LO	The liability of the Branch is unlimited. The assets of the parent company are at risk of attachment in case the liabilities of the branch exceeds its assets	The liability of the parent company is limited to the extent of its shareholding in the WOS. The assets of the foreign company are not subject to any attachments.
Permitted Incomes
The entire expenses of the LO in India will be met out of the funds received from Head Office through normal banking channels. There will not be any income of the LO.	The entire expenses of the BO in India will be met either out of the funds received from Head Office through normal banking channels or through income generated by it in India.	All income arising out of its business activities.
Indian Income Tax
Since there is no income accrual, there is no income tax. LO is required to file information in Form 49C with the Income Tax Department.	Since a branch office of a foreign company is taxed as a foreign company in India, it is taxed @ 40% plus surcharge plus cess	Any Indian company is taxed @ 25% plus surcharge plus cess
Payment of Dividend to Parent
Cannot pay dividend.	Dividend paid to parent is tax free	Dividend can be paid after payment of dividend distribution tax @ 15% plus surcharge plus cess
Management
LO is managed by Authorized Representative, resident in India (Country Manager)	BO is managed by Authorized Representative, resident in India (Country Manager)	Minimum two directors (one local resident in India is mandatory)
Statutory Audit
Financials would be liable to Statutory Audit by a Chartered Accountant	Financials would be liable to Statutory Audit by a Chartered Accountant	Financials would be liable to Statutory Audit by a Chartered Accountant
Internal Audit
Not Applicable	Not Applicable	Applicable subject to paid up capital, turnover, borrowings and deposits.
Tax Audit
Not Applicable	Applicable in case of turnover exceeding Rs. 10 million. Non Compliance would result into a penalty @ 0.5 % of the total turnover or Rs. 0.1 million whichever is less.	Applicable in case of Turnover exceeding Rs. 10 million. Non Compliance would result into a penalty @ 0.5 % of the total turnover or Rs. 0.1 million whichever is less.
GST Audit
Not Applicable	Applicable in case of turnover exceeding Rs. 20 million.	Applicable in case of turnover exceeding Rs. 20 million.
Transfer Pricing
Not Applicable	Applicable	Applicable
Remittance of profit toparent company
None, except upon closure of LO	Profits can be freely repatriated to the parent company subject to payment of applicable taxes.	By way of dividend subject to dividend distribution tax By way of royalty / fees for technical services By way of management fees Related party transactions are subject to transfer pricing regulations
Borrowing
Not allowed	The branch office is not allowed to borrow locally unless the prior approval of RBI is taken.	There is no restriction on local borrowing. External Commercial Borrowings are subject to guidelines issued by the RBI.
Annual Compliance – a. Filing
Yearly filing of annual accounts and annual returns with the Registrar of Companies Annual compliance with Reserve Bank of India Monthly and annual compliance with GST Monthly and annual compliance with Income Tax Monthly compliance with Employee Provident Fund Monthly compliance with Employee State Insurance	Yearly filing of annual accounts and annual returns with the Registrar of Companies Annual compliance with Reserve Bank of India Monthly and annual compliance with GST Monthly and annual compliance with Income Tax Monthly compliance with Employee Provident Fund Monthly compliance with Employee State Insurance	Yearly filing of annual accounts and annual returns with the Registrar of Companies. Annual compliance with Reserve Bank of India Monthly and annual compliance with GST Monthly and annual compliance with Income Tax Monthly compliance with Employee Provident Fund Monthly compliance with Employee State Insurance
Annual Compliance – b. Meeting
Not applicable	Not applicable	Board – One meeting per quarterShareholder -One meeting per year

Resident Director

As per 149(3) of the Indian Companies Act, 2013, every company shall have at least one director who has stayed in India for a total period of not less than 182 days in the previous calendar year.

Get a Customized Quote

Please Fill out the form, We will contact you at the earliest.