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How Can An NRI Start A Private Limited Company In India?

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A Non Resident Indian (NRI), being an Indian citizen living abroad possesses a number of opportunities for investment in India. Being a stakeholder in the nation’s development by bringing in valuable foreign exchange, the rights of an NRI is well protected by the government. While most investments of NRIs are directed towards traditional modes like real estate and gold, a good number of non residents is not averse to exploring avenues of the corporate world. With faster, simplified procedures and electronic submission of documents, NRIs are finding it convenient to start businesses in India. Private Limited Companies and Limited Liability Partnerships are the most sought after business types by NRIs.


Private Limited Company

Private limited companies are seen as particularly ideal for Non Resident Indians due to the nature of its legal and capital requirements. An interesting feature is that a Private limited company can be started with as less as two shareholders. The maximum limit may be two hundred shareholders. Compliances of a private limited company are much simpler compared to that of a Public limited company. One of the directors needs to be a resident in India in order to register a company. The may as well be spouses or family members of the non resident directors.

There is no requirement of prior approval from the Government or the Reserve Bank of India for directing foreign investments into a private limited company.

How To Register A Private Limited Company In India?

Incorporation of Private Limited Companies is regulated under the Companies Act, 2013. Most formalities for registering a private limited company can be completed online through the portal of the Ministry of Corporate Affairs. This is an added advantage to NRIs who are eligible to register themselves as directors without hassles. In order to complete the procedures given below, NRIs need to produce copies of passport and address proofs attested at their respective Indian Embassies, High Commissions or Consulates as the case may be.

Investment in shares and debentures by non residents in Indian companies are regarded as foreign direct investment and regulated by the reserve bank of India under Schedule I of Notification No. FEMA 20 /2000-RB. The Reserve Bank of India lays down detailed procedures the type of industries in which investments may be made and the requirements for licences in certain industries. NRIs are allowed to invest in shares and convertible debentures under portfolio investment scheme detailed under Schedule III. The rules for such purchases on non-repatriation basis is mentioned in Schedule IV.

Before FEMA came into force, FERA provided that resident foreigners and NRIs were not allowed to subscribe to Memorandum and Articles of Association without prior permission from the Reserve bank of India. After the repeal of FERA, all such provisions were dropped, enabling investments of foreigners in Indian companies.

Digital Signature (DSC)

A digital signature of the directors needs to be created and registered since most forms are submitted electronically. Digital signatures are certified by agencies appointed under the Information Technology Act, 2000. They are obtained after paying fees online and can be renewed after expiry of validity. On production of valid documents, DSC can be generated in 24 hours.

Director’s Identification Number (DIN)

DIN is a unique number allotted by the central government to a person appointed as a director in a company. It is obtained by applying under Form – DIR 3 pursuant to section 153 & 154 of the  Companies Act, 2013. The form is digitally signed and needs to be attested by a Company Secretary after payment of requisite fees. DIN is obtained after DSC is approved by the Government.

Simplified Proforma For Incorporating Company Electronically (SPICe)

The Ministry of Corporate Affairs, in its initiative in Government Process Re-engineering (GPR), introduced a groundbreaking initiative titled SPICe under form INC-32. This is an electronic form for the purpose of incorporation. This provides for swift incorporation services in line with the best international practices. SPICe introduces an electronic format of e-Memorandum of Association (form INC-33) and e-Articles of Association (form INC-34); both according to the Companies Act, 2013. Memorandum of Association would be filed as a linked electronic form unless it is for a Section 8 company. This form provides for pre-approval of company name before filing for incorporation. The form reinforces the government of India’s commitment to ease of doing business. Foreign subscribers to the Memorandum and Articles of Association will not be eligible to use the SPICe form. They would be required to follow the conventional method of incorporation by filing separate forms for separate steps.

Once the Certification of Incorporation is issued, the new company may apply for the following documents:


A company is a separate legal entity. Therefore, it needs to have its own Permanent Account Number (PAN) for the purposes of calculating Income tax liabilities. A Tax Deduction and Collection Account Number (TAN) number is used by companies that reduce TDS (Tax Deducted at Source) while making payments. TDS returns need to be filed on a quarterly basis after allocation of TAN.

Based on the type of Industry, the company may apply for VAT registration and Service Tax registration after filling prescribed forms and payment of requisite fees.

Incorporate Your Private Limited Company Through

Registering a company is not a painstaking procedure anymore. With proper guidance and professional help, your dream of starting a company will no longer remain one. is committed to startups. Our tie-ups with professionals like Company Secretaries and Chartered Accountants will make your initial journey hassle free. What is holding you back from chasing your dreams? Visit today.

30 Jan, 17

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