Types of Business Entities in India
Types of Companies in India - Types of Corporate Entities in India - Types of Legal Entities in India - Options for Foreign Investors Doing Business in India
Foreign Investors Establishing Business in India
Foreign investors planning to incorporate in India are required to seek governmental approval before investing in India. Some approvals are automatic, - RBI Approvals - though application is required for those approvals. Special Permission - FIPB Approvals - could be obtained to invest over and above the regular percentage allowed. See our FDI in India Sector wise Guide for more information on various conditions of investing in India. Also see Withholding Tax Rates For Foreign Companies Doing Business In India Under The Tax Treaties & the Joint Ventures in India
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Contact us for incorporating in India & setting up business in India

In India, the following types of business entities are available:
Private Limited Company
Public Limited Company
Unlimited Company
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, 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.

Private Limited Company
IT is mandatory for foreign investors to obtain governmental approval for incorporating in India or forming a joint venture in India. In some sectors certain restrictions apply._____****_____
A private company is a company which has the following characteristics:
shareholders’ right to transfer shares is restricted;
the number of shareholders is limited to fifty; and
an 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
Limited Liability Partnership Law soon in India
A new law to allow "Limited Liability Partnership" (LLP) in India is expected to be introduced in the Parliament of India._____****_____
A public company is defined as a company which is not a private company. The following conditions apply only to a public company:
It must have at least seven shareholders.
A public company is not authorized to start business upon the grant of the certificate of incorporation. In order to be eligible to commence business as a corporation, it must obtain another document called "trading certificate".
It must publish a prospectus or file a statement in lieu of a prospectus before it can start transacting business.
A public company is required to have at least three directors.
It 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.


Liaison 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.

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