Offshore Company In India: Registration, Benefits & Compliances

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    Table of Contents

    Overview

    offshore company in india

    India is the peninsular country in Asia with the Arabian Sea on its southwest, the Indian Ocean on its south, and the Bay of Bengal on its southeast. It is the second most populated country having more than 1.2 billion as the total population. The Companies Act 2013, governed all the corporate entities in India.

    With the modernization and increase in the use of technology, any business can reach out to the legal boundaries of the destination where it was incorporated. It can also operate outside the geographical boundaries legally.

    This helps the many US and European-based companies to operate their offshore company in India for taking benefit of low cost, skilled labor, and many others.

    The companies which are operated outside the country in which it has its head office are known as offshore companies. The owner offshores its company to foreign countries to expand it by taking benefit of that destination.

    An offshore company can easily operate and invest. These companies have to follow the regulations, policies, laws, and other forms of that country in which it is operating, not of that in which it has its headquarters or its founder or owner resides.

    In this article, we will see offshore companies in India, their requirements for establishment, benefits, the procedures for incorporating, and other related topics.

    Offshore Companies in India

    In India, two main acts govern the offshore companies established in India. These acts are the Companies Act,2013, and Foreign Exchange Management Act (FEMA), 1999. The foreign owner who established its offshore company in India must comply with the provisions of the Companies Act, 2013, and investment and transactions it has to follow the FEMA Act.

    According to these acts, any foreign owner can establish an offshore company as a private limited company or as a public limited company. The FDI is allowed by these forms of companies in India through direct routes only if these are not restricted. They can also establish a limited liability partnership form of company in India as an offshore company as it also allows FDI in India.

    In the following forms, a foreign owner can establish its offshore company in India-

    • Joint venture
    • Wholly owned subsidiary company
    • Branch office
    • Project office

    Some examples of offshore companies in India are- CISCO, IBM, Microsoft, EOSIL, and many others.

    Requirements for registering an offshore company in India

    For registering an offshore company in India, a foreign owner must have to fulfill the following requirements.

    Authorized capital

    For registering an offshore company in India, the authorized capital of ₹1,00,000 is required as the minimum amount. There is no special requirement for minimum paid-up capital for the registration of an offshore company in India.

    Directors and shareholders

    In case, when an offshore company is established in the form of a private company, then it is required to have at least 2 shareholders and 2 directors.

    In case, when it is established as a public company, then it can have seven shareholders and three directors as minimum requirements.

    In case, it is established as a limited liability partnership then it is required to have at least two designated directors and an additional director or member who is an Indian citizen.

    Article of association and Memorandum of Association

    As per the requirement of the companies act, 2013, the foreign owner must have to prepare and file the Memorandum of Association and article of association with the registrar of companies.

    In MOA, the name of the registered office, objects of the company, liability clause, capital clause, and name of the company are required to be mentioned.

    In AOA, the rules and regulations of the company are to be mentioned such as rules for transferring of shares, the appointment of directors, share capital, account filling and audits, voting rights of shareholders, etc.

    Office address

    It is required to have its head office in a foreign country or a place located outside India. A locally registered office is required for offshore companies in India and a registered agent for incorporating their company in India. The address of the office from where the officials take place and to India should be the registered office address.

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      Procedure to registering an offshore company in India

      The following steps are required to be followed for registering an offshore company in India-

      Applying for directors’ identification number

      Before establishing a company in India, the directors, whether Indian citizens or foreigners, have to apply for directors’ identification numbers with the MCA. For acting as a director of a company in India, every director must have a valid identification number.

      Digital signature certificate

      The subscribers to the Memorandum of Association and the article of association and directors have to obtain a digital signature certificate. They are required to attach their certificate while filling out e- MOA and e- AOA at the time of registration of the company with MCA and for other e- forms also.

      Reservation of the name of the company

      A company has to reserve its name by filling the form SPICe+. The name of the company must be unique which means it will not be similar to the name of any other company or trademark of another company. And also, it does not indicate any authority involvement. In case it happens then the application for registration will be rejected by MCA. If your form for reservation of name is rejected, then you can fill out a new SPICe+ form with the required amount of fees.

      Registering for e- filling of the form

      For filling out the form for incorporation of the company, you must register with MCA first. The registration process of the company in India is a fully online process. And a foreign owner can easily register its company online.

      Uploading of required documents

      In the case of an offshore company in India, these are required to upload e-MOA, e-AOA, Indian office address proofs, identity proofs, addresses of directors. These documents are to be uploaded in SPICe+ form.

      After the compliance with the provisions of the Companies Act, 2013 and approval of the application the registrar of the companies will issue the certificate of registration.

      Benefits of registering an offshore company in India

      There are many benefits to registering an offshore company in India. These are mentioned below.

      Low requirement for authorized capital

      The authorized capital required by an offshore company in India of at least ₹1,00,000.

      Corporate tax

      According to the provisions of the income tax act, the corporate tax rate of Indian companies is 30%.

      Highly skilled labor

      India has many highly skilled laborers who are ready to work. It is filled with professionals that are highly qualified in their fields. Many professionals are also proficient in English and other foreign languages which makes communication smooth and easy.

      Double taxation treaties

      There are approximately 70 countries that have taxation agreements with India. These countries include Singapore, Australia, Japan, the UK, Canada, the USA, and many others. According to this agreement, the companies can avoid double taxation on the same income.

      Technological infrastructure

      The technological infrastructure of India has changed in the last few years. Now, India is involved in offshoring work related to IT sectors and software development.

      Compliance Of An Offshore Company In India

      After the completion of the registration process of an offshore company in India, it is required to comply with the provisions of the Companies Act, 2013, the Income Tax Act, 1961, and also with the FEMA Act,1999. An offshore company in India is needed to conduct an annual general meeting in India every year. 

      And at the first annual general meeting, the board of directors is required to hire the first auditor of the company bypassing the board resolution. The auditor of the company makes sure about the accuracy of the financial records of that company which shows the true and fair position of this company.

      The auditors of an offshore company in India are required to maintain an accurate profit and loss account and balance sheet of the company. They are also required to file the director’s report and auditors’ report which tells about the functioning and financial reports of the company as per the view of the auditor. It is also required for an offshore company in India to file a tax return complaint with the income tax laws. An offshore company in India is needed to file annual returns, financial statements, and other required documents with the MCA.

      An offshore company in India is also required to maintain registers or reposts other than financial statements. These registers include-

      • Registers of directors
      • Registers for secretaries
      • Shareholders and members registers
      • Share transfer register
      • Registers of debenture holders
      • Registers of charges.

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        Conclusion

        India has experienced significant growth as a country of culture and business in recent times. The growth in the foreign sector alone is enough to prove that the talent wave has taken over a massive share of foreign investments all over the world. In this article, we looked at one of these examples of investments from foreign i.e., the Offshore Companies setting foot into the country.

        We covered the full information around the same including topics such as the procedure to register an offshore company in India, the documents and other requirements one needs to check while doing so, etc. Odint Consulting comes in when you are looking for such options to venture into. Looking at the industry, we are the go-to consulting service backed by years of expertise in the registration sector.

        FAQ’s

        An offshore company is a company that operates in a foreign country and not at the place where it has its headquarters. These companies can register themselves in different countries to get benefits from these countries.

        An offshore company in India has many benefits such as low tax, highly skilled labor, good technological infrastructure, and many more.

        These are the names of some successful offshore companies in India. These are CISCO, General Electric, Norscot, ESOIL, Microsoft, American Express, Dell, etc.

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