Types of business organization
In India, the following types of
business entities are available:
Private
Limited Company
Public
Limited Company
Unlimited
Company
Limited
Liability Partnership (LLP)
Partnership
Sole
Proprietorship
Liaison
Office/Representative Office
Project
Office
Branch
Office
Joint
Venture Company
Subsidiary
Company
Both the Indian promoters and the foreign promoters can form
the following business entities: Private Limited Company, Public Limited
Company, Limited Liability Partnership, Unlimited Company, Partnership and Sole
Proprietorship. The foreign companies also have the options of forming the
following type of business entities: Liaison Office/Representative Office,
Project Office, Branch Office, and Joint Venture Company. It must be noted that
a Joint Venture Company is not a separate type of legal entity; it could be
either a Private Limited Company, a Public Limited Company, or an Unlimited
Company. Similarly a wholly owned Subsidiary of a foreign company in India
could be either a Private Limited Company, a Public Limited Company, an Unlimited
Company, or a Branch Office.
For a
foreign Investor in India it is very important to choose a right kind of
business or corporate entity which best suits its purposes and takes care of
liability issues and tax planning issues. Foreign Companies planning to do
business in India should pay special attention to Entry Strategies in India for
Foreign Investors and corporate structuring to save taxes to the best extent
allowed by laws and international tax treaties.
It is also
mandatory for foreign investors or foreign shareholders, both individuals and
corporate shareholders, to seek Government Approvals for Investing in India In
some special cases Foreign Investment Promotion Board, FIPB Approval for
Foreign Investment in India is required. In other cases Reserve Bank of India,
RBI Approvals for Foreign Investment in India is required. The sectors where
RBI Approval for foreign investors is available under automatic route can be
found at FDI in India Sector wise Guide.
There are
various steps required to establish a business in India, before and after
incorporation, as mentioned hereinafter. See also the Procedure for Formation
of Company in India. A Company in India can have foreign directors provided
some conditions are fulfilled. The directors of an Indian company, both Indian
and foreigner directors, are required to obtain Director Identification Number
- DIN and Digital Signature Certificate - DSC. There are some restrictions
regarding issuing sweat equity for a company incorporated in India.Also see
Annual Corporate Filings in India for corporate maintenance requirements in
India.
Sole
proprietorship
Partnership
firm
Joint
stock companies
Co-operative
societies
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