Time frame in Incorporation

Nature of Activity Time Schedule 1. Allottment of DIN 3 days 2. Acquiring Digital Signature 2 days 3. Name approval 3- 4 days 4. Drafting of MOA & AOA, stamping, digitally signing and filing the documents on MCA portal 3 days 5. Grant of Certificate of Incorporation 4 days

Direct Identification Number (DIN)

1.	Application for allotment of Director Identification Number
	Section 266A inserted by the Companies (Amendment) Act, 2006 which, has been notified by Notification No. G.S.R. 648E dated 19th Oct.’ 2006 and has come into the force w.e.f. 1st Nov., 2006. The new section provides that every-
	a) Individual, intending to be appointed as director of a company; or b) Director of a Company appointed before the commencement of the Companies(Amendment) Act, 2006, shall make an application for allotment of Director Identification Number to the Central Government in form DIN-1.
	Every applicant, who has made an application for allotment of Director Identification Number, may be appointed as a director in a company, or, hold office as director in a company till such time such applicant has been allotted Director Identification Number.
2.	Allotment of Director Identification Number
	Section 266B has been inserted by the Companies(Amendment) Act, 2006, which provides that the Central Government shall, within one month from the receipt of the application under section 266A, allot a Director Identification Number to an applicant.
3.	Obligation on the Director to intimate Director Identification Number to concerned company or companies
	Section 266D of the Companies (Amendment) Act, 2006 provides existing director shall, within one month of the receipt of Director Identification Number from the Central Government, intimate his Director Identification Number to the company or all companies wherein he is a director. Such intimation is required to be given in Form DIN-2.
4.	Important feature of Director Identification Number
	• Any individual who is a director or intends to become a director of a company should apply for DIN. All the directors of a company must obtain DIN. • DIN application is to be supported by identity proof of any of the following viz. PAN card, Driving License, Passport, Voter ID Card, Ration card, Electricity Bill, Bank Statement. • DIN application is also to be supported with proof of residence of the applicant director which can be any one of the following viz. Passport, Voter Id Card, Ration card, Driving license, Electricity Bill,Telephone Bill and Bank Statement. • DIN is mandatory for e-filing of forms and documents and PAN cannot be used as an alternative to DIN. • DIN is mandatory for directors of Indian companies who are not citizens of India. • DIN is not mandatory for directors of foreign company having branch offices in India. • Only a single DIN is required for an individual, irrespective of number of directorship held by him/her. All the directorships of an individual would be mapped in the database through that DIN. • Even on resignation of a director the DIN will not be cancelled.
5.	Formalities to be complied with for appointment of first directors
	In the case of the appointment of first directors of a company, the following formalities must be complied with at the time of incorporation:-
	• Confirm whether the proposed director is having Directors identification Number (DIN), if he is not having DIN, apply in Form DIN. No company shall appoint or re-appoint any individual as director of the company unless he has been allotted a Director Identification Number under section 266B. • Obtain consent in the plain paper and the same shall be filed with the e-form 32. • Prepare e-form 32 in respect of the first directors and file it with the Registrar supported by the consent to act as a director; • Agreement, if any, which the company proposes to enter into with any individual for appointment as its managing director or whole-time director or manager shall be filed with the registrar; • E-Form 32 may be filed within 30 days after incorporation. It is advisable to file them at the time of filing of other documents for incorporation. The registrar also insists on it to be filed at the time of incorporation. • Particulars in the Register of directors shall be entered with respect to each director immediately after the incorporation of the company. • Particulars of the Directors’ shareholding will be entered in the Register of directors’ shareholdings;[Section 307] • Information relating to the director’s interests in other companies, firms and also names of his relatives for the purpose of section 297 and 299 of the Act will be obtained. A general notice of the interests under section 299 will also be given in Form 24AA prescribed under the Companies (Central Government’s) General Rules & Forms. 1956.

What is Digital Signature

What is a Digital Signature Certificate (DSC)?

Digital Signature Certificates are electronic format of physical signatures. DSC can be presented electronically to access information or services on the Internet, to prove the identity or to sign certain documents digitally.

Why is DSC required?

W.e.f. 16th September 2006 all the documents required to be filed with ROC have to be filed on portal of Ministry of Corporate Affairs at www.mca.gov.in using Digital Signature Certificate.

Who issues the Digital Signature Certificate?

A licensed Certifying Authority (CA) issues the digital signature. Various certifying authorities licensed by MCA include TCS, SIFY and MTNL etc.

Is Director Identification Number (DIN) a pre-requisite to apply for DSC?

It is not necessary that person should first have DIN number as a pre-requisite to apply for DSC. DSC can be obtained without DIN. But both DSC and DIN are required for filing any documents on portal of MCA.

What is the validity period of a Digital Signature Certificate?

The Certifying Authorities are authorized to issue a Digital Signature Certificate with validity or one or two years.

What is the legal status of a Digital Signature?

Digital Signatures have legal validity and are admitted in Court of Law for various purposes.

LIAISON, BRANCH OFFICE PROCEDURES

Q:1	How can foreign companies open Liaison /Branch office in India?
Ans:	a) With effect from February 1, 2010, foreign companies/entities desirous of  setting up of Liaison Office / Branch Office (LO/BO) are required to submit their application in Form FNC along with the documents mentioned therein to Foreign Investment Division, Foreign Exchange Department, Reserve Bank of India, Central Office, Mumbai through an Authorized Dealer bank. b) The applications from such entities in Form FNC will be considered by the Reserve Bank under two routes: Reserve Bank Route Where principal business of the foreign entity falls under sectors where 100 per cent Foreign Direct Investment (FDI) is permissible under the automatic route. Government Route Where principal business of the foreign entity falls under the sectors where 100 per cent FDI is not permissible under the automatic route. Applications from entities falling under this category and those from Non - Government Organizations / Non - Profit Organizations / Government Bodies / Departments are considered by the Reserve Bank in consultation with the Ministry of Finance, Government of India. c) The following additional criteria are also considered by the Reserve Bank while sanctioning Liaison/Branch Offices of foreign entities :   Track Record   For Branch Office a profit making track record during the immediately preceding five financial years in the home country. For Liaison Office a profit making track record during the immediately preceding three financial years in the home country.   Net Worth [total of paid-up capital and free reserves, less intangible assets as per the latest Audited Balance Sheet or Account Statement certified by a Certified Public Accountant or any Registered Accounts Practitioner by whatever name].   For Branch Office not less than USD 100,000 or its equivalent. For Liaison Office not less than USD 50,000 or its equivalent.  d) Permission to set up such offices is initially granted for a period of 3 years and this may be extended from time to time by the Authorized Dealer in whose jurisdiction the office is set up. The Branch / Liaison offices established with the Reserve Bank's approval will be allotted a Unique Identification Number (UIN). The BOs / LOs shall also obtain Permanent Account Number (PAN) from the Income Tax Authorities on setting up the offices in India. e) Liaison/Branch offices have to file an Annual Activity Certificate (AACs) from the Auditors, as at end of March 31, along with the audited Balance Sheet on or before September 30 of that year, stating that the Liaison Office has undertaken only those activities permitted by Reserve Bank of India. In case the annual accounts of the LO/ BO are finalized with reference to a date other than March 31, the AAC along with the audited Balance Sheet may be submitted within six months from the due date of the Balance Sheet.
Q:2	What are the permitted activities of Liaison Office/ Representative Office?
Ans:	A Liaison Office (also known as Representative Office) can undertake only liaison activities, i.e. it can act as a channel of communication between Head Office abroad and parties in India. It is not allowed to undertake any business activity in India and cannot earn any income in India. Expenses of such offices are to be met entirely through inward remittances of foreign exchange from the Head Office outside India. The role of such offices is, therefore, limited to collecting information about possible market opportunities and providing information about the company and its products to the prospective Indian customers. A Liaison Office can undertake the following activities in India :
	i) Representing in India the parent company / group compa¬nies. ii) Promoting export / import from / to India. iii) Promoting technical/financial collaborations be¬tween parent/group companies and companies in India. iv) Acting as a communication channel between the parent company and Indian companies.
Q:3	Can Foreign Insurance Companies / Banks set up Liaison Office in India?
Ans:	Foreign Insurance companies can establish Liaison Offices in India only after obtaining approval from the Insurance Regulatory and Development Authority (IRDA). Similarly, foreign banks can establish Liaison Offices in India only after obtaining approval from the Department of Banking Operations and Development (DBOD), Reserve Bank of India.
Q:4	What is the procedure for setting up Branch office?
Ans:	Permission for setting up branch offices is granted by the Foreign Exchange Department, Reserve Bank of India, Central Office, Mumbai. Reserve Bank of India considers the track record of the applicant company, existing trade relations with India, the activity of the company proposing to set up office in India as well as the financial position of the company while scrutinizing the application. The application in Form FNC should be submitted to the Reserve Bank through the Authorized Dealer bank.
Q:5	What are the permitted activities of Branch Office?
Ans:	Companies incorporated outside India and engaged in manufacturing or trading activities are allowed to set up Branch Offices in India with specific approval of the Reserve Bank. Such Branch Offices are permitted to represent the parent / group companies and undertake the following activities in India:
	i) Export / Import of goods. ii) Rendering professional or consultancy services. iii) Carrying out research work, in areas in which the parent company is engaged. iv) Promoting technical or financial collaborations between Indian companies and parent or overseas group company. v) Representing the parent company in India and acting as buying / selling agent in India. vi) Rendering services in information technology and devel­opment of software in India. vii) Rendering technical support to the products sup­plied by parent/group companies. viii) Foreign airline / shipping company.
	Normally, the Branch Office should be engaged in the activity in which the parent company is engaged.
Note:	Retail trading activities of any nature is not allowed for a Branch Office in India. A Branch Office is not allowed to carry out manufacturing or processing activities in India, directly or indirectly. Profits earned by the Branch Offices are freely remittable from India, subject to payment of applicable taxes.
Q:6	Whether Branch Offices are permitted to remit profit outside India?
Ans:	Branch Offices are permitted to remit outside India profit of the branch net of applicable Indian taxes, on production of the following documents to the satisfaction of the Authorized Dealer through whom the remittance is effected :
	a) A Certified copy of the audited Balance Sheet and Profit and Loss account for the relevant year; b) A Chartered Accountant’s certificate certifying -   i) The manner of arriving at the remittable profit ii) That the entire remittable profit has been earned by undertaking the permitted activities iii) That the profit does not include any profit on revaluation of the assets of the branch.
Q:7	What are the documents to be submitted to the AD bank at the time of closure of the Liaison/ Branch Office?
Ans:	At the time of winding up of Branch/Liaison offices, the company has to approach the designated AD Category - I bank with the following documents:
	a) Copy of the Reserve Bank's permission/ approval from the sectoral regulator(s) for establishing the BO / LO. b) Auditor’s certificate - i) indicating the manner in which the remittable amount has been arrived at and supported by a statement of assets and liabilities of the applicant, and indicating the manner of disposal of assets; i) confirming that all liabilities in India including arrears of gratuity and other benefits to employees, etc., of the Office have been either fully met or adequately provided for; and ii) confirming that no income accruing from sources outside India (including proceeds of exports) has remained un-repatriated to India. iii) That the profit does not include any profit on revaluation of the assets of the branch. c) No-objection / Tax Clearance Certificate from Income-Tax authority for the remittance/s. d) Confirmation from the applicant/parent company that no legal proceedings in any Court in India are pending and there is no legal impediment to the remittance. e) A report from the Registrar of Companies regarding compliance with the provisions of the Companies Act, 1956, in case of winding up of the Office in India. f) Any other document/s, specified by the Reserve Bank while granting approval.
Q:8	What is the procedure for setting up Project Office?
Ans:	The Reserve Bank has granted general permission to foreign companies to establish Project Offices in India, provided they have secured a contract from an Indian company to execute a project in India, and i. the project is funded directly by inward remittance from abroad; or ii. the project is funded by a bilateral or multilateral International Financing Agency; or iii. the project has been cleared by an appropriate authority; or iv. a company or entity in India awarding the contract has been granted Term Loan by a Public Financial Institution or a bank in India for the project. However, if the above criteria are not met or if the parent entity is established in Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran or China, such applications have to be forwarded to the Foreign Exchange Department, Reserve Bank of India, Central Office, Mumbai for approval.
Q:9	What are the bank accounts permitted to a Project Office?
Ans:	AD Category – I banks can open non-interest bearing Foreign Currency   Account for Project Offices in India subject to the following:
	• The Project Office has been established in India, with the general / specific permission of Reserve Bank, having the requisite approval from the concerned Project Sanctioning Authority concerned. • The contract, under which the project has been sanctioned, specifically provides for payment in foreign currency. • Each Project Office can open two Foreign Currency Accounts, usually one denominated in USD and other in home currency, provided both are maintained with the same AD category–I  bank. • The permissible debits to the account shall be payment of project related expenditure and credits shall be foreign currency receipts from the Project Sanctioning Authority, and remittances from parent/ group company abroad or bilateral / multilateral international financing agency. • The responsibility of ensuring that only the approved debits and credits are allowed in the Foreign Currency Account shall rest solely with the branch concerned of the AD. Further, the Accounts shall be subject to 100 per cent scrutiny by the Concurrent Auditor of the respective AD banks. • The Foreign Currency accounts have to be closed at the completion of the Project.
Q:10	What are the general conditions applicable to Liaison / Branch / Project Office of foreign entities in India?
Ans:	The general conditions applicable to Liaison/Branch/Project Office of foreign entities in India are as under;
	i) Without prior permission of the Reserve Bank, no person  being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran or China can establish  in India, a Branch or a Liaison Office or a Project Office or any other place of business. ii) Partnership / Proprietary concerns set up abroad are not allowed to establish Branch /Liaison/Project Offices in India. iii) Entities from Nepal are allowed to establish only Liaison Offices in India. iv) Branch/Project Offices of a foreign entity, excluding a Liaison Office are permitted to acquire property for their own use and to carry out permitted/incidental activities but not for leasing or renting out the property. However, entities from Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, Bhutan or China are not allowed to acquire immovable property in India even for a Branch Office. These entities are allowed to lease such property for a period not exceeding five years. v) Branch / Liaison / Project Offices are allowed to open non-interest bearing INR current accounts in India. Such Offices are required to approach their Authorized Dealers for opening the accounts. vi) Transfer of assets of Liaison / Branch Office to subsidiaries or other Liaison/Branch Offices is allowed with specific approval of the Central Office of the Reserve Bank. vii) Authorized Dealers can allow term deposit account for a period not exceeding 6 months in favor of a branch/office of a person resident outside India provided the bank is satisfied that the term deposit is out of temporary surplus funds and the branch / office furnishes an undertaking that the maturity proceeds of the term deposit will be utilized for their business in India within 3 months of maturity. However, such facility may not be extended to shipping/airline companies.