Registering a company abroad requires complex due diligence and extensive documentation completion, which can pose a challenge for businesses that do not have an understanding of the local business climate laws and regulations. Conjunction with the local authorities and adherence to their guidelines and regulations regarding Overseas Company Registration are other factors that can cause operational hindrances to the company formation process. Various crucial decisions are involved in mSelecting the right business structures and business segment of the overseas company, selecting local representatives and resident office, compliances with relation to tax and corporate compliances, local laws, and labour and employment regulations, along with the transfer pricing guidelines related to foreign direct investment.
The particular procedures for registering a company abroad will change according to the nation you decide to incorporate in. Nonetheless, the following broad actions are applicable in the majority of nations-
Selecting a Business Structure
Selecting a business structure is the first step towards overseas company registration or registering a company abroad. In many countries, the most common forms of business structures available are private/public limited companies, limited liability partnerships (LLPs), and representative offices. While LLP is the most popular business structure, Representative Offices are merely offices that present the interest of the parent entity in the foreign country and do not carry out any commercial/business activity.
Selecting a Business Name
Selecting a business name is necessary after deciding on a business structure. Your company name must be original and not be used by another entity in the nation in which you are registering a company abroad.
Preparing and Submitting Documents to the Authorities
In order to submit an application for registering a company Abroad to the Local Authorities, the members or directors of the company must first compile the company’s statutory paperwork. After the charter documents are drafted and submitted to local incorporation Authorities, the Overseas Company Registration can go ahead.
Obtain Business Licenses
Based on the desired business license, the company shall file for a valid industry license with the concerned Government Departments and Regulatory Authorities so that the entity can carry out the desired business activity in a foreign jurisdiction. In order to Register Your Business Internationally, the stakeholders of the company are required to apply for requisite licenses and permits from the authorities.
Types of Business Structures Available for Company Registration in Foreign Countries
The types of business structures available for registering a company abroad are mentioned below:
1. Limited Liability Partnership (LLP)
LLPs are the most commonly formed and popular form of business structures available for the purpose of Overseas Company Registration. In order to set up an LLP, you are required to have a valid LLP deed or agreement I require to be executed between the members of the company, which details the rights and liabilities of the company.
2. Partnerships
In most cases, contracts are used to form partnerships. The laws of the state control them. Partnership entities are generally exempt from income tax. Rather, a partnership’s profits flow through to its participants, who are responsible for paying any applicable federal or state income taxes in accordance with their partnership interest. There are two types of partnerships: limited and general. Legally speaking, each partner is accountable for the partnership’s debts in general. Legal responsibility in a limited partnership is capped at the capital contribution made by each partner.
3. Joint Ventures
While registering a company abroad, joint ventures are established for definite, restricted goals, like building a project or exploring minerals. Any two or more people or commercial entities may engage in joint ventures. A corporation or a partnership may serve as the operating entity.
4. Branch Office
A branch office in foreign countries can be set up by appointing a local representative as a proxy representative of your interest in the country.
Documents Required for Company Registration in Foreign Countries
Setting -up a foreign subsidiary company in India requires several documents to be prepared, executed, and filed with the concerned Ministry/Regulatory Authorities of the foreign jurisdiction where the company is being incorporated. The following documents are required –
1. Charter Documents of the Company and Personal Details
Some of the key documents required for the purpose of Company Registration in Foreign Countries. The Memorandum of Association, LLP Deed/shareholders agreement, ID proofs of directors, passports and address proofs, and registered address of the company. Also, we help in identifying local residents to be named local directors/shareholders and submit details of the same with the Legal Affairs Bureau for verification.
2. Bank Account Opening
In order to Register Your Business Internationally, the member or directors of the company shall open a separate bank account for the purpose of receiving/remitting funds meant for the foreign company. In order to open a bank account, an application is made to the concerned local bank by attaching all the necessary IDs and incorporation documents with the application form, along with a power of attorney. Also, the money received in the bank account shall be in accordance with the Liberalised Remittance Scheme and other regulations of the Foreign Exchange Management Act and RBI guidelines.
3. Tax Registration
The National Tax Agency or Revenue Ministry are the authorities responsible for tax registration and collection. A tax registration would help the business avail several tax rebates and Ease of registration while setting – up your company in Special Economic Zones (SEZs) or tax-exempted.
Company Incorporation in Special Economic Zones and Exclusive Economic Zones
Most emerging economies, as well as many developed economies, make extensive use of special economic zones, or SEZs. Governments encourage industrial activity inside these geographically defined zones by providing infrastructure support, tax and regulatory incentives, and other measures. Five years ago, there were only around 4,000 SEZs; currently, there are approximately 5,400 zones spread throughout 147 economies, and more than 500 new SEZs are planned as per the World Investment Report, 2019 of the UNCTAD. The SEZ boom is a reaction to growing competition for globally movable investment and is a component of a new generation of industrial policy.
Some countries also have vastportions of their maritime boundaries designated as Exclusive Economic Zones (EEZs) and account for a large portion of cross-border trade and economic exchange. The government, too, provides sizeable tax exemptions and tariff reduction benefits to the companies incorporated in these free zones. The government is also endeavouring to relax licensing requirements and administrative controls in these free zones so that foreign direct investment can be diverted and the economy of these free zones can receive a growth surplus. Additionally, several governments have been developing the social and commercial infrastructure of these Special Economic Zones to streamline them in accordance with international business standards. In India, several state-of-the-art SEZs have come up and are rapidly developing, such as the GIFT City and Kandal Port Area in Gujarat, Greater Noida in Uttar Pradesh, etc. Businesses incorporated in these Zones receive tax holidays on customs and income taxes as well as various other reporting and licensing requirements.
Procedure for Registering a Company Abroad
The procedure for registering a company abroad is mentioned below:
Step 1
Conduct research and due diligence on the country where the company is being sought to be set up by doing market analysis.
Step 2
Determine the business structure as well as the name that shall be most suitable for registering a abroad. Out of the business structures available – LLP, Partnership, Proprietorship, Company, or Representative Office, the stakeholders shall decide the business structure that best represents the interest of the company.
Step 3
After deciding on a company name and organizational structure, you must register your business with the relevant government agencies. Depending on the nation in which you are incorporating, this procedure will change.
Step 4
After registering your business in a foreign nation, you must create a bank account in the nation where it was incorporated as per the laws of the country with a local bank. By doing this, the company will be able to accept and send payments on your company’s behalf.
Conclusion
A company’s business expansion policy must include doing business outside of India or founding a company there in order to expand globally. Some of the Indian laws and statutory requirements must also be kept in mind if you, as a business enterprise, are trying to establish a business outside of India in addition to the legal needs of that nation. For the purpose of An Indian entity may directly invest outside of India under the regulations pertaining to overseas direct investment by contributing to the capital of the foreign entity or by subscribing to its memorandum of association since this demonstrates the entity’s long-term interest in the overseas entity. Stated differently, certain alternatives are restricted, such as joint ventures (JVs) and wholly owned subsidiaries (WOS).
Frequently Asked Questions (FAQs)
It is possible to register a company in a foreign country while still living in your own country. For a variety of reasons, including access to a bigger market or tax advantages, many businesses decide to pursue this path.
The most common business structures available for businesses incorporating their company abroad are a Limited Liability Partnership, a Joint Stock Company, a Branch Office, and a Representative Office.
Globally, out of all the business structures available for company incorporation, a Limited Liability Partnership or Company (LLP/LLC) is the most common and popular business structure.
Businesses may access a wide range of clients, break into new markets, and experience sustained development by utilizing global possibilities. Beyond monetary rewards, these advantages include having access to talent, having a competitive edge, and having worthwhile educational experiences.
You will be required to submit certain basic documents such as MOA, AOA, and company incorporation certification along with a few other documents depending upon the specific requirements of the country in which you are registering a company abroad.
The first step will be to select a business structure, and the particular procedures for registering a company abroad will change according to the country in which you decide to incorporate a company.
Based on research conducted by BusinessFinancing.co.uk and the World Bank’s Doing Firm report, the most affordable nations are Slovenia, Rwanda, and Venezuela as they don’t charge any fees to establish a company.
Yes, Indians are allowed to register a company firm in the US. In the United States, a company or limited liability company may be formed for the business.
If a foreign company has a contract with an Indian company to finish a project in India, it can build a project office without RBI clearance. Remittances from overseas should be used to finance the project. It must receive approval from the relevant authorities.
Registration fees can range from $300 to $1000 or more, depending on the company type, unique business needs, and registration status.
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