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Private limited incorporation - foreign subscribers

sundarpandian (articles student) (96 Points)

04 December 2013

One of my client wants to incorporate a new company for which the subscribers/directors are foreigners. They will be coming to chennai to sign MOA and AOA through multiple visa. They will be signing the MOA and AOA in front of my auditor. They will give their passport as ID and address proof.

Question

1. Normal incorporation procedure to be followed or i need to follow any special procudure?

2. If any special requirement to be fulfiled means please let me know?

Thanks in advance

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4 Replies

Anil Dhiman (Company Secretary) (114 Points)
Replied 05 December 2013

Please refer teh new provisions of Compaies Act, refer Companies Act 2013. It has been speciofied that one of the promoters has to be necessarily an Indian.

Rest of the requirement will remain the same.

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Ajay Mishra (Company Secretary) (74337 Points)
Replied 05 December 2013

As perSection 149(3) of new Companies Act, 2013:

Every company shall have at least one director who has stayed in India for a total period of not less than one hundred and eighty-two days in the previous calendar year.

So if you are complying the such provision then you can start registration proceeding. In addition, the subcriber sheet of MOA & AOA will be notarise by Indian embassy of the country or from a country they are residing.

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Ajay Mishra (Company Secretary) (74337 Points)
Replied 05 December 2013

NON-RESIDENT INDIAN AS SUBSCRIBER TO THE MOA/AOA

The Reserve Bank of India had given general permission under section 29(1)(b) of the former FERA, 1973 to NRI to subscribe to the MOA of an Indian company and to take shares as a subscriber .(Notification No. FERA 143/93-RB, dated 26-4-1993 issued by RBI, Mumbai in this regard is reproduced hereunder:

“The RBI has given general permission to NRI to subscribe to the MOA/AOA of Indian Company for the purpose of Incorporation of the company subject to the condition that:-

the total face value of the shares to be taken by NRI does not exceed Rs. 10,000
the company is being manly formed for undertaking industrial activities
the MOA of such company does not permit the company to take up any agriculture/plantation activities and to deal in real estate business other than developing real estate, and
such company shall file a declaration in the prescribed form with the RBI regarding particular of such shares issued within 900days from the date of incorporation of the company.

DCA Circular dated 16-2-1995 clarifies that there can not be any restriction for incorporation of a company whether all the subscriber to the MOA/AOA/ proposed directors are residing abroad, being either foreign nationals, or NRI subject to the approval of RBI, where necessary.

The RBI may issue such a general permission also under FEMA, 1999 also. The FEMA(Permissible Capital Account Transactions) Regulations, 2000 allow persons resident outside India to invest in an issue of security by body corporate or an entity in India.

Now, it has been decided by RBI through Circular No. 36 dated 26.09.2012 that in cases, where non-residents (including NRIs) make investment in an Indian company in compliance with the provisions of the Companies Act, 1956, by way of subscripttion to Memorandum of Association, such investments may be made at face value subject to their eligibility to invest under the FDI scheme.

For more details go to the following link:

https://rbi.org.in/scriptts/BS_CircularIndexDisplay.aspx?Id=7590

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sls associates (articles assistant) (26 Points)
Replied 06 December 2013

Dear Sir,

Noted. Thanks for your reply. Yesterday i have enqired about the requirement in ROC office. They said that if a person comes to india on multiple visa means no need to get signature from Indian embassy.

Thanks in advance