India Law Offices at Mumbai

Can foreign nationals be directors or shareholders in an Indian company?

Foreign nationals can be a director in an Indian company without approval except an individual from a country sharing a land border with India such as China, Pakistan, Bhutan, Myanmar, Afghanistan, Nepal, or Bangladesh requires clearance from the Ministry of Home Affairs before appointment as directors. Foreign nationals can also be shareholders in the company except in prohibited sectors or from a country sharing a land border requires the prescribed authority approval.

What is the minimum capital requirement to start a company in India?

Companies Amendment Act 2015 removes the restriction of minimum capital requirement for both Private and Public companies in India. Post amendment, the private and public companies can be incorporated without the capital requirement.

What is the timeline for setting up a company in India?

It normally takes 20 – 30 days to set up a company in India which includes the process such as reservation of the name, filling of the requisite documents for the company incorporation, obtaining the Permanent Account Number & Tax-Deduction Account Number and opening the bank account.

Is statutory audit mandatory for all companies in India?

Under section 139 of the Companies Act 2013, the company must appoint a first auditor within 30 days from the date of incorporation in the Board Meeting, who will hold office from the conclusion of that meeting until the conclusion of the sixth annual general meeting, i.e., for the period of five years.

Are private companies required to hold board meetings?

Under Section 173 of the Companies Act 2013, every company must have Four board meetings in every financial year, in such a manner that not more than 120 days intervene between two consecutive meetings. Board meetings may be held even on holidays and at any place. Board meetings may be held through videoconferencing.

What is due diligence, and why is it important in M&A?

Due diligence in M&A transactions is a process of carrying a thorough investigation wherein the acquiring company evaluates the target company before finalizing a transaction. The goal is to assess any potential risks, hidden liabilities, legal/financial non-compliance, or any other related red flags that could affect the deal.

Do mergers require government or regulatory approvals in India?

Yes, M&A transactions essentially require various compliance and approvals from the authorities. The approvals may however depend on the nature and size of the transaction. SEBI, RBI, MCA etc. are some primary regulatory authorities involved in the process.

Can foreign companies acquire Indian businesses?

Yes, foreign companies can acquire Indian businesses, which is subject to certain regulations , set out mainly by FEMA, RBI etc. There are certain sector specific regulations as well, which essentially should be complied with.

What is the typical timeline for a litigation case in India?

Timelines are contingent on the nature of action and location as well as forum of action. Typically, civils disputes can be anticipated to conclude anywhere between 2-4 years from date of institution.

Can a foreign company or individual file a lawsuit in India?

A foreign entity, either an individual or as a body corporate can institute a multitude of legal proceedings in India seeking to resolve any Civil Disputes, institute Arbitration proceedings, including challenging the arbitral award or seek its execution, as well as institute insolvency proceedings against a Corporate Debtor.

What is the limitation period for filing a case in India?

Limitation period varies for each cause of action and nature of action. Typically, a civil suit can be instituted within 1 to 3 years from accrual of cause of action, subject to the nature of disputes. Challenge to judicial orders may be made between 30 – 90 days from the date of the order, depending on the nature of proceedings.

Can arbitration be used for all types of disputes?

Typically, most civil disputes can be referred to arbitration, barring matters pertaining to criminal offences, initiation of insolvency and winding up proceedings, matrimonial disputes such as divorce, child custody, matters pertaining to succession and inheritance, disputes regarding Trust Deeds, and other matters wherein exclusive jurisdiction has been conferred upon a tribunal for adjudication of disputes.

Is an arbitral award legally binding and enforceable in India?

Arbitration awards are legally binding upon all concerned parties to the dispute and are enforceable as a decree passed by the Court. Domestic awards can be executed by filing a petition before a competent court by filing a petition before Principal Civil Court or the concerned High Court where the assets are located or the place where the Respondent resides or carries on business.

Can a party challenge an arbitral award in India?

Arbitration awards can be challenged on limited grounds available under law such as instances where the award deals with a dispute not being a subject matter of reference, composition of tribunal not as per agreement, agreement not being valid under law, or the award being opposed to public policy. Under any event, such challenge does not permit the Courts to determine the matter on merits.

What are the different types of visas available for foreigners looking to enter India?

India offers several types of visas depending on the purpose of the visit such as Tourist Visa, Business Visa, Employment Visa, Student Visa, Medical Visa, Conference Visa, Research Visa, Missionary Visa, Entry Visa, E-visa(s) etc.

Can a foreign national apply for Permanent Residency in India?

Foreign nationals can apply for Permanent Residency under the PRS scheme by making an investment through the Foreign Direct Investment (FDI) route. This scheme is not available for Pakistani citizens or individuals of Pakistani origin.

What are the penalties for overstaying a visa in India?

Overstaying a visa in India can result in several penalties, including fines , ban on Re-entry, and/ or Deportation. Severe cases of overstaying could lead to legal action, including imprisonment.

Can a foreign national or NRI buy property in India?

An NRI can buy a property in India however, they are prohibited to purchase an agricultural land. A foreign national however, cannot buy any property in India per se, however, there are certain grey areas. For more details, please reach out to us at office@indialawoffices.com 

What legal remedies are available in case of delayed possession by a builder?

The aggrieved buyer can approach RERA and file a complaint against the builder, generally seeking interest OR a refund with interest for the delayed possession of the property.

How can I verify the ownership of a property before purchasing it?

Ownership of a property can be verified by checking the official registration documents at the government authorities. It is generally recommended to carry out a complete title search and get the legal documents vetted by a lawyer to confirm ownership of the property, assess if the property documents are legal & authentic and to confirm that the property is free from any encumbrance, before purchasing it.

Is POSH compliance mandatory for all organizations, and do they need to establish a dedicated committee for related complaints? 

All the organizations, whether Government, Private or Semi Government with 10 or more employees must establish an internal complaints committee for prevention and redressal of the grievances related with sexual harassment of women at workplace. To have the committee in place is mandatory as per the POSH Act 2013.

Is it mandatory to provide an employment contract to employees in India?

Having an employment contract in place is not legally mandatory but it is recommended to have one since it defines the employment terms, rights and obligations of both employer and employee. It serves as a reference point in case of any dispute and ensures transparency.

What types of leave are employees entitled to in India?

Employees are usually entitled to casual leave, sick leave, maternity leave however there may be other kind of leaves depending upon the company’s internal policies and standing orders.

Can an employer terminate an employee without notice? 

There is no standard process to terminate an employee in India. An employee may be terminated without notice under certain circumstances else the termination has to be according to terms laid out in the individual contract signed between the employee and the employer.

What are the maternity benefits for female employees? 

The statutory Maternity benefits for female employees in India include paid maternity leaves, medical / maternity bonus, protection from dismissal due to absence and other facilities which are subject to the internal policies of an organization.

What is the corporate tax rate for companies in India?

The standard corporate tax rate for domestic companies is 30% plus surcharge and education cess. However, companies satisfying certain conditions may have an option to pay tax at 22% plus a surcharge and education cess. The foreign companies are taxable at the rate of 35% plus surcharge and education cess.

Is GST registration mandatory? What are the GST registration requirements for businesses?

Goods & Service Tax (GST) registration is mandatory for businesses having aggregate turnover more than INR 4 million in the case of the supply of goods and INR 2 million in the case of the supply of services in a financial year.

The businesses (also known as Taxable Person) are required to make an application for GST registration along with documents such as company and tax registration, proof of place of business, board resolution, promoters and director details and bank statement.

How often does a company need to file GST returns?

The taxable person is required to file monthly returns in Form GSTR-3B (containing a summary of outward and inward supplies) by the 20th of the succeeding month and Form GSTR-1 (containing an invoice-wise return of outward supplies) by the 11th of the succeeding month. Taxpayers with turnover up to INR 50 million can file Form GSTR-1 and GSTR-3B quarterly. The taxable persons having an aggregate turnover of more than INR 20 million are required to submit the GSTR-9 and more than INR 50 million are required to submit the GSTR-9C subject to the conditions as may be prescribed.

Who can initiate insolvency proceedings under IBC?

Insolvency Proceeding under the Insolvency and Bankruptcy Code, 2016 can be initiated by the following:

• Financial Creditor (Section 7): Bank, financial institution, lender or any other person who provided a loan or financial assistance.
• Operational Creditor (Section 9): any person who has provided goods or services to the debtor or employment dues or any statutory dues.
• Corporate Applicant (Section 10): The company can also voluntarily initiate insolvency proceedings.

What is the role of an RP in the IBC process?

The roles of the Resolution Professional (RP) under the Insolvency and Bankruptcy Code, 2016 are as below:

• Custody of all the assets and overseeing the management of the Corporate Debtor.
• Collect and maintain an updated list of claims from financial & operational creditors.
• Convene and participate in all meetings of the committee of creditors.
• Prepare the information memorandum and invite prospective resolution applicants, prospective lenders, investors, and any other persons to present resolution plans to the committee of creditors.

What is the timeline for resolving insolvency cases under IBC?

Under Section 12 (3) of the Insolvency and Bankruptcy Code 2016, the maximum timeline for completing a Corporate Insolvency Resolution Process (CIRP) is 330 days from the insolvency commencement date. The timeline can be extended but only in exceptional circumstances.

Can a company withdraw insolvency proceedings once initiated?

Section 12A of the Insolvency and Bankruptcy Code, 2016, the National Company Law Tribunal can allow the withdrawal of applications admitted under Sections 7, 9 or 10 under the Insolvency and Bankruptcy Code, 2016, with approval of a 90% voting share of the committee of creditors.