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Private Limited (NRIs without FDI)
All you need to know about establishing a Private Limited Company for Non Resident Indians (Without FDI) in India:
Starting a business can turn out to be one of the most interesting experiences of your life. The choice of the business entity has long term implications throughout the life-cycle of the business. Hence, it is recommended to discuss your business plan with a professional, and choose an entity that will support the vision of the business.
A Private Limited Company is the most popular as well as the most preferred choice of business entity in India. As it requires a minimum of 2 members, it is most appropriate for small and medium-sized businesses and start-ups. It is a privately held business entity with a limited liability and allows for a 100% foreign direct investment with government approval.
Non Resident Indian: Citizens of India, holding Indian Passport, immigrated to any other country for six months or more. A Non Resident Indian (NRI), being an Indian citizen living abroad possesses a number of opportunities for investment in India. Private limited companies are seen as particularly ideal for Non Resident Indians due to the nature of its legal and capital requirements.
An interesting feature is that a Private limited company can be started with as less as two shareholders. The maximum limit may be two hundred shareholders. Compliances of a private limited company are much simpler compared to that of a Public limited company. One of the directors needs to be a resident in India in order to register a company and the resident director can be spouse or family member of the non resident directors.
Note:
• For NRI’s and Foreign National below mentioned documents must be apostilled by Consulate of Indian Embassy or attested by Foreign Public Notary depending upon whether country is the member of Hague convention or not.
• For NRI’s and Foreign National Please make note that if the person belongs to country who is not the member of Hague convention than all the documents as mentioned above need to be apostilled by Consulate of Indian Embassy. And if the person belongs to the country who is the member of Hague convention than all the documents as mentioned above can be provided after attestation by Foreign Public Notary.
Benefits
of Private Limited Company:
Ease of
Formation
A Private Limited Company can be incorporated with
minimum 2 directors by filing SPICe E Form INC-32 along with link form SPICe
MOA (INC-33) and SPICe AOA (INC-34)?. Once the documents are verified,
Certificate of Incorporation (COI) is issued to the company by MCA within 2 to
3 days under Fast Track Registration
the firm’s continuity.
Limited
Liability
The liability of each member of the company is
limited. If any liability arise then its member is not personally affected;
members are only liable for unpaid shares held by them and not more than that.
The personal, individual assets of the shareholders are not at risk.
Secrecy
Under the Company Law, a Private Limited Company is
not mandated to publish its accounts and file several documents. This way, it
becomes easier for a Private Limited Company to maintain business secrets.
Investment
A Private Limited Company has the flexibility to
easily raise loans and investments from NRIs and foreigners.
Owning
Property
A company being a juristic person, can acquire, own,
enjoy and alienate, property in its own name. No shareholder can make any claim
upon the property of the company as long as the company is a going concern. The
shareholders are not the owners of the company’s property.
Dual
Relationship
In a Private Limited Company, it is possible
for the company to make a valid and effective contract with any of its members.
It is also possible for a person to be in control of the company and at the
same time be in its employment. Thus, a person can at the same time be a
shareholder, creditor, director and also an employee of the company.