View on Indian Company Law

India is emerging as a new business bazaar in the world. Looking at the present scenario, India’s skilled administrative and industrial manpower are improving at a fast rate and today it is considered as one of the best market available in the world. However if you are planning to establish your branch office in India or new business in India then the existence of present corporate legal structure is one of the most significant aspects of the corporate environment that you should consider very seriously.

Indian company law is based on its English counterpart, and plays an important role in streamlining the process for regulation of companies & branches of various Indian and foreign companies operating in India. As per Indian Company Law, any individual who wish to set-up and establish his or her public and private company then it comes under Companies Act of 1956. In accordance to this act, a company can be formed by initially registering the Memorandum and Articles of Association with the State Registrar of Companies of the state, where one plan to locate his or her main office. It is very important to understand and know that under Companies Act of 1956 a company is considered as an incorporated association having its autonomous entity distinct from the members constituting it.

Moreover, if any foreign company largely engaged in trading and manufacturing activities wants to open its branch office in India to undertake various export and import trading activities or to encourage technical and financial collaboration between Indian companies, in that situation the company must submit application to Reserve Bank of India. As per Indian company law, any foreign investor looking to open a liaison office must submit form FNC-5 to Foreign Investment and Technology Transfer Section of the Reserve Bank of India. Apart from this for launching a project office, application can be made on Form FNC-10 to the regional offices of the Reserve Bank of India. A foreign investor need not have a local partner, whether or not the foreigner wants to hold full equity of the company. The portion of the equity thus not held by the foreign investor can be offered to the public.

Now once you form a company and get its name approved by the Registrar of Companies (ROC) in the State/Union Territory where the corporation will uphold its registered office, then it becomes very important to put forward Memorandum of Association (MoA) and Articles of Association (AoA) documents to the ROC. The Memorandum of Association is a file that sets out the constitution of the company and contains various parameters like objectives, liabilities and scope of the company. Similarly, AoA contain the rules and regulations of the company for the better and effective management of its internal affairs. Thus after the duly stamped Memorandum of Association and Articles of Association, documents are filed and the filing fees are paid, the ROC carefully examines the documents and, if needed, indicate authorized personnel to formulate all essential corrections.

Finally, Tax registration is next major step. Every business is answerable for income tax and must obtain a tax identification card and number also well-known as Permanent Account Number from the Revenue Department. Apart from this business responsible to withhold tax must also essentially gain a Tax Deduction Account Number (TAN).