Non Residential Indians (NRIs) and Foreign Nationals can choose to invest or start a Private Limited Company or Limited Company in India. NRIs and Foreign Nationals are not allowed to invest or start a Proprietorship or Partnership or One Person Company in India, while Foreign Direct Investment in Limited Liability Partnership (LLP) requires prior approval from the Reserve Bank of India.

NRIs, Persons of Indian Origin (PIOs), Foreign Nationals and Foreign Residents can act as a Director of an Indian Company (Companies Act 2013). To become a Director of an Indian Company, the non Indian Citizen must obtain a digital signature certificate, and a Director Identification Number (DIN). A Digital Signature Certificate requires the non Indian citizen to submit a self-attested and notarized copy of his/her Passport and an address proof (Driver’s License, Utility Bill, Residency Card). On obtaining a digital signature and DIN, the non Indian citizen can be made a member of the Board of Directors during incorporation. DIN can be obtained for newly incorporated companies through the SPICe form, or through the Form DIR-3 for already incorporated companies looking to add a director.

A private limited company must have a minimum of 2 directors and a maximum of 7 Directors. It is recommended that at least 1 director be an Indian citizen and resident, while the other Board members can be of any nationality or residency.

A foreign national or entity can hold shares to an Indian company, but this is subject to the FDI norms in India. As per the Companies Act 2013 a Private Limited Company must have minimum of 2 shareholders and a maximum of 200 shareholders. Since the Reserve Bank of India allows 100% FDI in many of the sectors in India under the automatic route, the process for ownership of shares of an Indian Company by a foreign entity is simple.

Incorporating a company with a non Indian citizen, or a foreign entity is similar to the incorporation process for a company with Indian directors and shareholders. The Foreign national or entity, during incorporation, must present additional notarised documents as a verification of identity.

Sources:

• India Filings “How to register a Company”
• India Filings “Registration process 2018 version