Types of businesses – What are my options for investing?

While setting up in India, foreign companies should choose an entity structure that caters best to their need. Selection of the right entity structure will help the company establish itself as a strong player in the Indian market, and also help them reap financial gains.A foreign investor or company may set up as an unincorporated entity or incorporated entity in India.Unincorporated entities permit a foreign company to do business in India by establishing a liaison office, branch office, project office, or a trust. An incorporated entity, like a limited liability partnership, joint venture, or a wholly owned subsidiary is considered a separate legal entity and has a more structured setup.

Find out more about the investment options in India

Key considerations when opening a business in India

Opening a bank account

Opening a bank account entail selecting a bank based on your preferences, submitting certain documents, and funding your account. Once the formalities are completed, you can begin using your account, saving both time and money. However, before beginning the process, a person should decide what type of bank account he or she wants to open, such as a savings, current, or fixed deposit account.

The Reserve Bank of India’s Know Your Customer Norms (KYC Norms) details the procedures that banks must follow while opening accounts. With the KYC norms as a foundation to secure against fraudulent and criminal activities, each bank may require mire documents and information as prescribed by the bank’s internal regulations for the opening of an account.

Intellectual property protection

India has been a World Trade Organisation (WTO) member since 1995. WTO member nations must include some IP protection in their national laws. India is also a signatory to the following international IP agreements:

  • Paris Convention: Under this convention, any person from a signatory state can apply for a patent or trademark in any other signatory state and will be given the same enforcement rights and status as a national of that country would be.
  • Berne Convention: Under this convention, each member state recognizes the copyright of authors from other member states in the same way as the copyright of its own nationals.
  • Madrid Protocol: Under this convention, a person can file a single trademark application at their national office that will provide protection in multiple countries.
  • Patent Cooperation Treaty: This is a central system for obtaining a ‘bundle’ of national patent applications in different jurisdictions through a single application.

India is, however, not a signatory to the Hague Agreement, which would have enabled the protection of designs in multiple countries through a single filing.

The following laws provide the legal basis for intellectual property protections in India and are periodically reviewed and amended as new technological developments and market reforms necessitate the case to be.

Click here to know more about IPR and opening a bank account in India

Setting up a business without entity

In india, businesses may do business without setting up a formal entity by working with a supplier agent or partner. On hiring an agent or supplier in India, businesses may conduct international trade through these partners.

Alternately, foreign companies may also use the “employer on record model” wherein an India based employer hires an employee on their payroll while the individual works for the foreign company. However, the foreign company takes on the risk of creating a permanent establishment in the country.

Read this article to know more.   

Closing a business in India

The liquidation procedure is given by the Insolvency and Bankruptcy Code. Businesses may opt for the liquidation procedure due to a set of factors, such as faulty management, economic issues, low demand, among others. According to Indian legislation, the liquidation procedure refers to the way the company’s assets are terminated and distributed to the entitled parties. The liquidation can be triggered on a voluntary basis through the intervention of the company’s creditors or other members. In this case, the procedure can be completed without the intervention of a local court.

To gain insights on liquidation of businesses in India, read this section


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