Business Incorporation Doing Business in India, Malaysia, UAE or USA

Advantages of Registering Company

There are many advantages of registering your company. Private / Public limited company has many advantages over proprietorships and partnerships, as elaborated below.

1. Limited Liability

First and foremost benefit of doing business via company is the limited liability conferred upon the company's directors and shareholders. As a sole trader or partnership business, personal assets of the proprietor or partners can be at risk in the event of a failure of the business, but this is not the case for a Company. The unfortunate events like business failures are not always under an entrepreneur’s control; hence it is pivotal to secure the personal assets of the businessman in the event of crises. Unlike proprietorship and partnership, if a Company becomes insolvent and is wound up, only the assets of the company are used to clear its debts. The Directors or Shareholders of the company have no personal liabilities and are not made bankrupt and are free to carry on business.

2. Legal Entity / Status or Recognition

A private limited company is a legal entity, a juristic person established under the Act. It has its existence separate from its directors and members. Private limited company status enables you to be taken more seriously than a proprietorship / partnership status does Operating as a private limited company often gives suppliers and customers a sense of confidence in a business. Larger organisations in particular will prefer in dealing with private limited companies than proprietorship/partnership organisations Easy to attract quality workforce and achieve strategic motivation of employees by using flexible and wide range of management designations.

3. Perpetual Succession

Another important characteristic of a private limited company is perpetual succession. It is a popular saying that the directors may come and go the members may come and go, but the existence of a company remains forever. A company once incorporated remains alive unless and until it is wound up by complying with the provisions of Law. The death, disability or retirement of any of its members does not affect the continuity of the company, irrespective of change in its membership There is no obligation for a Private limited company to commence business/trading within any set time period after its incorporation.

4. Project Cost and Risk Factors

For entrepreneurs going for hi-tech or high capital outlay projects it is always advantageous to go in for a company form of organisation. Where the financial stake involved is high, it is found that banks and financial institutions while sanctioning financial assistance, insist on having a private limited company.

5. Easy Transferability

Where it is proposed to sell the business as a going concern, all that is required is to transfer the entire shareholding to the purchaser and thus facilitate easy change in management and ownership. This will save time and money of the Promoters. Huge amount of stamp duty is saved.

6. Borrowing Capacity

A company enjoys better avenues for borrowing of funds. It can issue debentures, secured as well as unsecured, accept deposits from the public, etc. Even banking and financial institutions prefer to render large financial assistance to the company rather than partnership firms or proprietary concernsA company enjoys better avenues for borrowing of funds. It can issue debentures, secured as well as unsecured, accept deposits from the public, etc. Even banking and financial institutions prefer to render large financial assistance to the company rather than partnership firms or proprietary concerns.

7. Taxation

Sole traders and partnerships pay income tax. Companies pay Corporation tax on their taxable profits. There is a wider range of allowances and tax deductible costs that can be offset against a company's profits.

8. Raising Money from Public

Public Limited Companies can raise large amount of capital from the general public by issue of shares and public deposits Private Limited Companies can raise capital only by private placement of shares and deposits.

9. Dual Relationship

In the company form of organisation it is possible for a company to make a valid effective contract with any of its shareholders/directors. It is also possible for a person to be in control of a company and at the same time be in its employment. Thus, a person can at the same time be a shareholder, director, creditor and employee of the company. For eg:

  • As a director he can receive remuneration.
  • As a shareholder he can receive dividend.
  • As a lessor he can receive lease rent.
  • As a creditor he can lend money and earn interest.
  • As a supplier he can supply goods from his/his family business.


Doing Business in India by Locals

Formal registration of companies has many immediate benefits for the companies and for business owners and employees. Legal entities can outlive their founders. Resources are pooled as several shareholders join forces to start a company. Formally registered companies have access to services and institutions from courts to banks as well as to new markets. And their employees can benefit from protections provided by the law. An additional benefit comes with limited liability companies. These limit the financial liability of company owners to their investments, so personal assets of the owners are not put at risk. Where governments make registration easy, more entrepreneurs start businesses in the formal sector, creating more good jobs and generating more revenue for the government.

Private Limited Company

A Private Limited Company is a company which has the following characteristics:


  • Brainchild Corporate ServicesRight to transfer of shares is restricted

  • Brainchild Corporate ServicesThe number of shareholders is limited to two hundred

  • Brainchild Corporate ServicesAn invitation to the public to subscribe to any shares or debentures is prohibited

A Private Limited Company is the most popular form of business entity used for Foreign Investors in India, including USA investors in India. It takes some time to incorporate in India as there are various steps required in forming a private limited company in India. There are various steps required to establish a business in India, before and after incorporation, as mentioned hereinafter.

Public Limited Company

A Public Limited Company is defined as a company which is not a private company. The following conditions apply only to a public company:

  1. Brainchild Corporate ServicesIt must have at least seven shareholders.

  2. Brainchild Corporate ServicesA public company is not authorized to start business upon the grant of the certificate of incorporation.

  3. Brainchild Corporate ServicesIn order to be eligible to commence business as a corporation, it must obtain another document called "trading certificate".

  4. Brainchild Corporate ServicesIt must publish a prospectus or file a statement in lieu of a prospectus before it can start transacting business.

  5. Brainchild Corporate ServicesA public company is required to have at least three directors.

  6. Brainchild Corporate ServicesIt must hold statutory meetings and obtain government approval for the appointment of the management.

There are several other provisions contained in the Companies Act 1956 which are applicable only to public companies and should be consulted.

Limited Liability Partnership

A law to allow "Limited Liability Partnership" (LLP) in India has been enacted by the Parliament of India recently. (Limited Liability Partnership (LLP) Act of 2008).LLP is an alternative corporate business entity that provides the benefits of limited liability of a company but allows its members the flexibility of organizing their internal management on the basis of a mutually-arrived agreement, as is the case in a partnership firm. This format would be quite useful for small and medium enterprises in general and for the enterprises in services sector in particular, including professionals and knowledge based enterprises. As proposed in the Bill,

  • Brainchild Corporate ServicesLLP shall be a body corporate and a legal entity separate from its partners.

  • Brainchild Corporate ServicesIt will have perpetual succession. While the LLP will be a separate legal entity, liable to the full extent of its assets, the liability of the partners would be limited to their agreed contribution in the LLP.

  • Brainchild Corporate ServicesFurther, no partner would be liable on account of the independent or unauthorized actions of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful business decisions or misconduct.

Branch Office

Foreign companies engaged in manufacturing and trading activities abroad are allowed to set up Branch Offices in India for the following purposes:

  • Brainchild Corporate ServicesExport/Import of goods

  • Brainchild Corporate ServicesRendering professional or consultancy services

  • Brainchild Corporate ServicesCarrying out research work, in which the parent company is engaged

  • Brainchild Corporate ServicesPromoting technical or financial collaborations between Indian companies and parent or overseas group company

  • Brainchild Corporate ServicesRepresenting the parent company in India and acting as buying/selling agents in India

  • Brainchild Corporate ServicesRendering services in Information Technology and development of software in India

  • Brainchild Corporate ServicesRendering technical support to the products supplied by the parent/ group companies

  • Brainchild Corporate ServicesForeign airline/shipping company

A branch office is not allowed to carry out manufacturing activities on its own but is permitted to subcontract these to an Indian manufacturer. Branch Offices established with the approval of RBI, may remit outside India profit of the branch, net of applicable Indian taxes and subject to RBI guidelines Permission for setting up branch offices is granted by the Reserve Bank of India (RBI).

Project Office

Foreign companies planning to execute specific projects in India can set up a temporary project/site offices in India for carrying out activities only relating to that project. The Government of India has now granted general permission to foreign entities to establish project offices subject to specified conditions.

Liasion Office / Representative Office

A Liaison Office could be established with the approval of the government of India. The role of Liaison Office is limited to collection of information, promotion of exports/imports and facilitate technical/financial collaborations. Liaison office cannot undertake any commercial activity directly or indirectly.


Doing Business in India by Foreigners

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.

Private Limited Company

A Private Limited Company is a company which has the following characteristics:


  • Brainchild Corporate ServicesRight to transfer of shares is restricted

  • Brainchild Corporate ServicesThe number of shareholders is limited to two hundred

  • Brainchild Corporate ServicesAn invitation to the public to subscribe to any shares or debentures is prohibited

A Private Limited Company is the most popular form of business entity used for Foreign Investors in India, including USA investors in India. It takes some time to incorporate in India as there are various steps required in forming a private limited company in India. There are various steps required to establish a business in India, before and after incorporation, as mentioned hereinafter.

Public Limited Company

A Public Limited Company is defined as a company which is not a private company. The following conditions apply only to a public company:

  1. Brainchild Corporate ServicesIt must have at least seven shareholders.

  2. Brainchild Corporate ServicesA public company is not authorized to start business upon the grant of the certificate of incorporation.

  3. Brainchild Corporate ServicesIn order to be eligible to commence business as a corporation, it must obtain another document called "trading certificate".

  4. Brainchild Corporate ServicesIt must publish a prospectus or file a statement in lieu of a prospectus before it can start transacting business.

  5. Brainchild Corporate ServicesA public company is required to have at least three directors.

  6. Brainchild Corporate ServicesIt must hold statutory meetings and obtain government approval for the appointment of the management.

There are several other provisions contained in the Companies Act 1956 which are applicable only to public companies and should be consulted.

Limited Liability Partnership

A law to allow "Limited Liability Partnership" (LLP) in India has been enacted by the Parliament of India recently. (Limited Liability Partnership (LLP) Act of 2008).LLP is an alternative corporate business entity that provides the benefits of limited liability of a company but allows its members the flexibility of organizing their internal management on the basis of a mutually-arrived agreement, as is the case in a partnership firm. This format would be quite useful for small and medium enterprises in general and for the enterprises in services sector in particular, including professionals and knowledge based enterprises. As proposed in the Bill,

  • Brainchild Corporate ServicesLLP shall be a body corporate and a legal entity separate from its partners.

  • Brainchild Corporate ServicesIt will have perpetual succession. While the LLP will be a separate legal entity, liable to the full extent of its assets, the liability of the partners would be limited to their agreed contribution in the LLP.

  • Brainchild Corporate ServicesFurther, no partner would be liable on account of the independent or unauthorized actions of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful business decisions or misconduct.

Branch Office

Foreign companies engaged in manufacturing and trading activities abroad are allowed to set up Branch Offices in India for the following purposes:

  • Brainchild Corporate ServicesExport/Import of goods

  • Brainchild Corporate ServicesRendering professional or consultancy services

  • Brainchild Corporate ServicesCarrying out research work, in which the parent company is engaged

  • Brainchild Corporate ServicesPromoting technical or financial collaborations between Indian companies and parent or overseas group company

  • Brainchild Corporate ServicesRepresenting the parent company in India and acting as buying/selling agents in India

  • Brainchild Corporate ServicesRendering services in Information Technology and development of software in India

  • Brainchild Corporate ServicesRendering technical support to the products supplied by the parent/ group companies

  • Brainchild Corporate ServicesForeign airline/shipping company

A branch office is not allowed to carry out manufacturing activities on its own but is permitted to subcontract these to an Indian manufacturer. Branch Offices established with the approval of RBI, may remit outside India profit of the branch, net of applicable Indian taxes and subject to RBI guidelines Permission for setting up branch offices is granted by the Reserve Bank of India (RBI).

Project Office

Foreign companies planning to execute specific projects in India can set up a temporary project/site offices in India for carrying out activities only relating to that project. The Government of India has now granted general permission to foreign entities to establish project offices subject to specified conditions.

Liasion Office / Representative Office

A Liaison Office could be established with the approval of the government of India. The role of Liaison Office is limited to collection of information, promotion of exports/imports and facilitate technical/financial collaborations. Liaison office cannot undertake any commercial activity directly or indirectly.

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.

Brainchild Corporate ServicesEach Business is Unique

We understand that each business has its own special and unique requirements. Our job is to help you to get the right package so you can start to operate legally in India, US or Middle East. With our experienced and friendly team, we provide high quality personalized services to each individual client. We take pride in building long term customer relationships by ensuring that you receiving the highest quality service. Our fees are transparent and competitive with no hidden fees involved. Our clients are from all over the world, ranges from individuals to small and medium enterprises and with near to hundreds of virtual office clients. Call us today for a no obligation discussion on your requirement.

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