Since last month, my colleagues and I have been keeping ourselves busy working through all the paperwork required to set up a Privated Limited in India. We ended up getting it wrapped up (with the exception of a few formalities) in record time, one month to be exact. This admittedly is largely thanks to some excellent help by our lawyer and accountant.
If you ever find yourself in a similar situation, here are the basic steps involved if you're not an Indian national (and in our case for the Union Territory of Pondicherry):
- get a personal bank account
- apply for a DIN (Director Identification Number)
- apply for a PAN (Permanent Account Number)
- apply for a digital signature
- get your company name approved
- get a commercial lease for your company registered address
- draft and sign the memorandum and articles of association
- get your Certificate of Incorporation
- get company seals
- apply for a company bank account
- put up a company signboard at your registered address
- deposit at least 1 lakh INR initial capital as foreign equity investment
- get FC-GPR paperwork for the deposited money
- apply for a company PAN (Permanent Account Number)
- apply for a company TAN (Tax Account Number)
- apply for a municipal license
- apply for an IEC (Import Export Code)
Getting a bank account as a foreigner, particularly under a tourist visa, is no easy task. Be prepared to spend at least half a day at the bank filling in paperwork. Make sure you have several photocopies of your passport, visa, proof of foreign address, your local address (ideally a notarized rental agreement). Bring several passport and stamp sized photos.
When applying for approval of your company name, you have to submit three names in order of preference. The first part of your company name has to be a unique common name, followed by a description of your activity. Use of certain words (such as "India" etc.) can either be prohibited or require you to have a higher capital investment.
For getting a company bank account you will need to draft a resolution, signed by the directors and stamped with the company seals. This resolution needs to state that the board of director approves applying for a bank account at that particular bank and branch. If you want to apply for internet banking or any other services those also need to be explicitly mentioned.
Without a company signboard on your registered address, the postal service will not deliver your letters. Make sure you put it up as soon as your company gets incorporated. Any registered post sent to the company will need to be stamped with the company seal.
I can highly recommend getting a good lawyer to help draft your articles of association and a reliable accountant. Don't expect to be able to file all the paperwork yourself, this could also end up costing you a lot more money.
It's been quite an adventure getting this sorted, but looking back it was - despite being tedious and incredibly frustrating at times - a relatively straight forward process.