• Legal and Tax Advice

We are an Indian citizen who wants to do business in USA . For that we need incorporate a company in USA , state Delaware or Nevada with 2 directors who is indian nationals. But we need to carry entire operation from India as we reside in India .

Nature of Business : Consulting , Seminars , Corporate Trainings Online 
Can you guide us on the Legal and Tax implication and what is the best way to form a company so that will be legally correct in all the compliance and as per laws for India. 
We have questions like:
1. What type of company we need to Register in India like Pvt Ltd or LLP

2. Do we need any permissions from RBI before incorporating a company in US state Delaware or Nevada .I mean what is correct way to transfer money from India to US for incorporation and other such requirements in USA. If yes how much time it will take and the price for the same.

3. Do we need to prepare any business agreements for getting funds from US company to the Indian company as it will be related or subsidiary company as the owners will be the same . As we need to transfer the monthly expense from US to Indian company.
Asked 3 years ago in Business Law from Bangalore, Karnataka
1) you can either form a limited company or registered partnership firm or LLP.

2)  An Indian Party is eligible to make overseas direct investment under the Automatic Route. An Indian Party is a company incorporated in India or a body created under an Act of Parliament or a partnership firm registered under the Indian Partnership Act 1932 or a Limited Liability Partnership (LLP) incorporated under the LLP Act, 2008 and any other entity in India as may be notified by the Reserve Bank. 

3)The Indian Party can invest up to the prescribed limit of its net worth (as per the last audited Balance Sheet) in JV / WOS for any bonafide activity permitted as per the law of the host country. The prescribed limit vis-a-vis the net worth will not be applicable where the investment is made out of balances held in the EEFC account of the Indian party or out of funds raised through ADRs/GDRs;

The Indian Party is not on the Reserve Bank’s exporters' caution list / list of defaulters to the banking system published/ circulated by the Credit Information Bureau of India Ltd. (CIBIL) /RBI or any other credit information company as approved by the Reserve Bank or under investigation by the Directorate of Enforcement or any investigative agency or regulatory authority; and

The Indian Party routes all the transactions relating to the investment in a JV/WOS through only one branch of an authorised dealer to be designated by the Indian Party

4)The Indian Party intending to make overseas direct investment under the automatic route is required to fill up form ODI duly supported by the documents listed therein, i.e., certified copy of the Board Resolution, Statutory Auditors certificate and Valuation report (in case of acquisition of an existing company) as per the valuation norms and approach an Authorized Dealer (designated Authorized Dealer) for making the investment/remittance.
Ajay Sethi
Advocate, Mumbai
45573 Answers
2677 Consultations

5.0 on 5.0

You should have L1 visa. The L-1 visa category actually provides the opportunity for foreign nationals who own and operate a business outside the U.S.A.   USCIS will approve the L visa for new office for one year for the person who have worked for at least one year in an executive or managerial capacity to establish a new branch office or company subsidiary in the U.S.A.

There is a treaty of commerce and navigation between Indian & USA for Indian businessman to coming to develop and direct a new business that he has invested or in the process of investing. For L-1 visa holder not a “minimum” amount of investment is required but that investment must be “substantial,” and the business cannot be “marginal.”

For obtain business licenses and permits, business location that suits your needs ( tax benefits ), registration of a business name and fulfillment of other miscellaneous requirement you should consult a qualified US attorney. He will help you better because in USA there is no uniform norms and it's varies by state to state.
Shivendra Pratap Singh
Advocate, Lucknow
5066 Answers
78 Consultations

4.9 on 5.0

legal rules for doing business in the USA.

There are common top items on any Indian company’s wish-list when  starting business in  USA.

The Wish List
•	Access to US markets (Federal/State/Commercial)
•	Business environment and Quick time-to-market
•	Access to qualified Partners (Technology, Systems Integrators, Defence Contractors, Life Sciences, etc)
•	Highly skilled workforce
•	Business and Professional services
•	Business friendly government, competitive taxes, dynamic entrepreneurial community
•	Excellent transport connectivity : Air, Rail, Road, Sea
•	Easy access to commercial real estate
•	Quality of Life: Healthcare, Education, Leisure, others
•	Local community of Indians
The underlying motivations behind the above wish-list are:
•	Access to high-growth markets
•	Technology & knowledge
•	Economies of size & scale of operations
•	Tap global natural resources
•	Leverage International brand names
There are several essential considerations any Indian high-tech companies (large or small) need to make before taking that all important step of setting up shop in the US.

Part I – Prepare for your move to the USA

For most high-tech companies the decision whether to expand to the US will be one of the toughest they will have to make.
This step is crucial if a company – Biotech, Aerospace, IT, Telecommunications or the Internet industry – has plans to conquer the North- American (and other global) markets.
But it will involve considerable effort and money to establish a US branch – and if this fails it can be ruinous for a company.
So the first recommendation is: Take your time. Collect all necessary information and look to establish as many contacts on the ground at an early stage. High-tech companies that have successfully established branches in the US report that it took them a few months of careful preparation.
Here are four critical questions to be addressed at the outset:
•	What is the market for your products and services in the US? Who are your competitors and what advantage does your product/solution have over theirs?
•	Is there a real, not merely perceived, need for your products and services?
•	What resources do you need to ensure success in the competitive US market?
•	How much can you realistically outlay to set up a US branch bearing in mind your expected ROI? Is there a partner organisation that can assist you in market entry?

Part II – Choosing your preferred US location

To find the best place for your particular company consider the following items:
•	Availability of high-speed Internet access as well as the degree of fibre-optical networking within the region and its buildings;
•	Availability of well-educated employees with expertise and skills in IT, telecommunications and Internet-related fields;
•	The presence of top companies in your industry (e.g. for partnership and alliances);
•	Availability of high-class office space;
•	The general importance of the region for venture capital (if needed);
•	Flight distance and time difference to India;
•	Look at the wider location. The perfect office can mean very little if the overall quality of life in the district is poor. Climate, education, recreation, safety and healthcare are just some of the considerations that should be taken into account;
•	Availability of a highly qualified, professional economic development group that can assist with market entry and negotiate financial incentives.

Part III – Decide your Business and Private Banking needs early

Few Indian business people might be aware that it can be extremely difficult to find a US bank willing to provide a business and/or private account (not to mention a credit card). Since stringent US laws concerning money laundering were introduced some years ago, US banks only accept clients from foreign countries if they are convinced they are absolutely ‘clean’. Following are three strong recommendations to follow when establishing links with a bank in the US:
•	Open an account at a branch of a US bank in India very early in your planning stages (at least two years before your planned move if possible).
•	Again if possible, duplicate your efforts with more than a single US bank.
•	Whichever bank you finally decide to use, ask the Indian manager to write a letter of recommendation to his counterpart at the branch in the location you plan to move to. It cannot be over stressed how important this step is – it can greatly speed up the process. Indeed, this applies also to opening a private account and to making arrangements for credit cards.

Part IV – Arrange Legal and Accounting requirements in advance

If you are expanding into the US, it would be wise not to rely entirely on your Indian experience as the US situation is not the same.
In the United States contracts are extensive; far more detailed than you might be accustomed to in your home base. And the laws are very different as well.
This is why you need to consult a US lawyer even before you make the move across the globe. Some US law firms have branches in India where you can make personal contact; some have helpful websites where you can get e-mail addresses to get in contact. Still others can be reached through your local Chamber of Commerce.
Once again, it is strongly recommended that you pay a visit to the lawyer of your choice in the preliminary stages of your plans to discuss important matters such as:
•	Visas for all employees of your company that will be going to the US (consider carefully how long they will be staying there)
•	Renting or leasing contracts;
•	Hiring contracts;
•	Service contracts;
•	Patents;
•	Warranty and related legal aspects.
The same principle applies to pertinent issues surrounding your accounting requirements.
You need to identify a suitable accounting company in advance; if you do not there is every chance you might encounter serious tax hurdles that could seriously hinder your move. A good accounting company is important for all payroll-related issues.

Part V – Identify Suitable Office Space

Office rental varies considerably depending on location. Prices can differ by a factor of up to three.
It is also worth bearing in mind that the amount of available office space can be limited depending on location, and this can involve huge security payments to landlords, even as much as a one or two years rent.
The owners of office buildings tend to look favourably on companies wanting to lease large space rather than simply one or two smaller offices. So finding office space for a start-up team of five to 10 employees can be time consuming and anything but simple.
Therefore, the following recommendations should be noted carefully:
•	If you need a rather small area of office space, rather than beginning with your very own individual but tiny office accommodation, consider sub-letting from a bigger tenant;
•	If your company is a high-tech start-up, give serious thought to the advantages of establishing your first offices within an incubator (which would bring additional benefits such as comprehensive office services or centre management, access to venture capital, legal and accountancy advice, contact with potential customers and partners);
•	Try to avoid long-term leasing (sometime contracts offered cover five or even 10 years);
•	Consider serviced office accommodation. Although expensive, it can be cheaper and quicker to obtain when compared with the cost and effort required in doing it all yourself;
•	Consult reputable real estate agents/brokers in your region of choice and compare services and offerings very carefully.

apart from above legal rules consult USA based lawyer also.
R.K. Nanda
Advocate, New Delhi
457 Answers

4.7 on 5.0

1. There are three types of companies you can incorporate for starting a business viz. Private Ltd. Company, Public Limited Company and LLP. You may also form a partnership firm. For a Private Limited Company, the minimum required number is 2 and maximum 10/20 (banking company) whereas for a Public Limited Company, the minimum number of members is 7 and maximum could be anything, Consider forming a Limited Liability Partnership (LLP) as it is emerging as the best form of business these days because it combines the benefits of both partnership and company; the liability of the partners is limited to the extent of their contribution or share capital. No extra risk is involved. In Partnership, the partners have unlimited liability, so it is not recommended. Get a flawless partnership deed compliant with Indian laws executed so that your business can continue untrammelled and reap profits.

2. RBI permission is not required to incorporate a company in US. An Indian Party or a resident individual can make investment in any activity in a foreign country subject to the regulations and/or prior approval of the Reserve Bank of India. An Indian party shall not make any direct investment in a foreign entity engaged in real estate or banking sector. An Indian Party can make direct investment in a Joint Venture or Wholly Owned subsidiary outside India. The ‘Total Financial Commitment’ by an Indian Party in its Joint Venture company (JV) /Wholly-owned subsidiary (WOS) outside India should not exceed 100% of net worth of the Indian Party. The ‘net worth’ should be as per the last audited balance sheet of the Indian Party. Direct Investments for the sole purpose of investing in overseas JV/WOS are allowed to be made through SPV, under the Automatic route. The Indian party should not be placed on the caution list by RBI or any other law enforcement agency in India.

3. Agreement compliant with Indian laws and the guidelines framed RBI will be the foundation stone of your business.
Ashish Davessar
Advocate, Jaipur
22977 Answers
634 Consultations

5.0 on 5.0

1. You can form a partnership firm/LLP, Pvt. Limited Company of public Limited Company as per your targetted level of business & investment requirement,

2.  For incorporating a Company  in US you will be required to invest & an Indian Company is allowed to invest through the automatic route. There is a prescribed limit for such investment depending on the net worth of the investing Company,

3. For relating an Indian Company as subsidiary Company, certainly you should execute a business agreement duly incorporating all the terms and conditions for conducting the planned business and can send and receive funds to & from India following prescribed rule.
Krishna Kishore Ganguly
Advocate, Kolkata
18510 Answers
448 Consultations

5.0 on 5.0

1.you can go for pvt.ltd. co. in india and get it registered with ROC.

2.RBI permission is not needed.

3.you will have to execute registered agreement containing all relavant terms and conditions of ur business.
R.K. Nanda
Advocate, New Delhi
457 Answers

4.7 on 5.0

nothing left to add, experts advised very well
Nadeem Qureshi
Advocate, New Delhi
4856 Answers
221 Consultations

4.9 on 5.0

You start a company in us and then You can register a partly limited company having its branch in india and get permission from RBI and register the same under companies act 1956.
Jeshma Mohandas KP
Advocate, Kozhikode
567 Answers
1 Consultation

4.5 on 5.0

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