Company Registration in India for Chinese

Press Note No. 3 (2020 Series) dated 17th April 2020 amended India's FDI Policy to mandate prior Government approval for investments from countries sharing a land border with India, including China. This applies regardless of the sector or investment quantum. The objective is to prevent opportunistic acquisitions during periods of economic vulnerability and to safeguard national security interests.

Yes. If the beneficial owner of the investment is situated in or is a citizen of China, the restriction applies irrespective of the jurisdiction of the immediate investment. Investments routed through Hong Kong, Singapore, the USA, or any other intermediate country still require Government approval if Chinese beneficial ownership exists at any level.

As per the Standard Operating Procedure dated 17th August 2023, the target timeline is 12 weeks from application to decision, excluding time taken by applicants to respond to queries. However, actual timelines vary based on sector sensitivity, UBO complexity, and security clearance requirements. Strategic sectors may take 4-6 months.

Key documents include: Letter of Authorisation, FDI Proposal Summary, Shareholding Pattern (pre and post-transaction), Diagrammatic Fund Flow, UBO Declaration, Investee and Investor Documents (COI, MOA, AOA, Board Resolutions, Audited Financials), Investment Agreement, Valuation Certificate (where applicable), Security Clearance Form (Annexure-II of SOP), and Notarised Affidavit on INR 100 stamp paper.

If rejected, the proposed investment cannot proceed. The Administrative Ministry issues a rejection letter after obtaining concurrence from DPIIT as per the SOP. Common grounds for rejection include unclear beneficial ownership, national security concerns, or non-compliance with sectoral conditions. You may reapply with a revised proposal that addresses the concerns raised.

Press Note 3 applies to investments from countries sharing a land border with India: China (including Hong Kong and Macau), Pakistan, Bangladesh, Nepal, Bhutan, Myanmar, and Afghanistan. The restriction covers both direct investments and beneficial ownership traceable to these jurisdictions.

No. MHA Security Clearance is specifically required for Chinese nationals seeking appointment as directors in Indian companies. Shareholders are subject to scrutiny during the DPIIT approval process, but do not require separate MHA clearance unless they are also proposed directors.

Yes, but they must first obtain security clearance from the Ministry of Home Affairs under the Companies (Appointment and Qualification of Directors) Amendment Rules, 2022. This clearance must be attached to the DIN application (DIR-3) and to the consent to act as a director (DIR-2).

Yes. Under Section 149(3) of the Companies Act, 2013, every company must have at least one director who has stayed in India for a total period of not less than 182 days in the immediately preceding financial year. This requirement cannot be waived for foreign subsidiaries.

Yes. We provide professional Nominee Director services to meet the statutory residency requirement, subject to appropriate indemnity agreements and a defined scope of responsibilities. This allows Chinese companies to incorporate without requiring their personnel to establish Indian residency.

The application is filed online through the E-SAHAJ SEWA portal (https://esahajmcaservices.nic.in). Required details include passport information, parentage, address history, travel history to India, and a declaration regarding criminal cases. The Foreigners Division of MHA manages the portal.

As per the FDI SOP, if MHA cannot provide comments within the prescribed timeline, it will intimate the Administrative Ministry of the expected timeframe. In practice, clearances may take 2-3 months or longer, depending on individual circumstances. The incorporation cannot proceed until clearance is obtained.

No. For China-linked investments, Government Approval under Press Note 3 is a prerequisite for issuing shares to foreign investors. Incorporating first and then attempting to share allotment without approval would constitute a FEMA violation, attracting penalties and potentially reversing the transaction.

Under the Automatic Route, no prior Government approval is required—investment can proceed with post-facto RBI reporting. Under the Government Route, prior approval from the concerned Ministry/DPIIT via FIFP is mandatory. All investments from land-border countries, including China, fall under the Government Route by default under Press Note 3.

There is no statutory minimum paid-up capital prescribed under the Companies Act, 2013. However, we recommend starting with at least INR 1,00,000 (approximately USD 1,200) to cover initial operational costs, bank account requirements, and demonstrate substance for regulatory purposes.

Yes, but Branch Offices (BO) and Liaison Offices (LO) for Chinese entities also require RBI approval and may be subject to enhanced security scrutiny. Subsidiaries (Private Limited Companies) offer greater operational flexibility, limited liability protection, and clearer regulatory pathways for Chinese investors.

FDI is prohibited in: Lottery Business, Gambling and Betting, Chit Funds, Nidhi Companies, Trading in Transferable Development Rights, Real Estate Business (except construction development), Manufacturing of Cigars/Cigarettes/Tobacco substitutes, and activities not open to private sector investment.

Yes. All directors and authorised signatories must have a valid Class-3 Digital Signature Certificate issued by a licensed Certifying Authority in India to sign e-forms electronically. Foreign nationals may obtain a DSC through Indian service providers after submitting apostilled copies of their identity documents.

No, not since 7th November 2023. China officially joined the Hague Apostille Convention, and documents now require only an Apostille from the Chinese Ministry of Foreign Affairs or its local counterparts. The previous two-step process of notarisation followed by embassy legalisation is no longer mandatory.

A Chinese notary public must first notarise documents, then apostille them by the Ministry of Foreign Affairs of China or its authorised local branches. The Apostille certificate authenticates the signature, seal, and official capacity of the notary, making the document valid for use in India without further legalisation.

Yes. All documents in the Chinese language must be translated into English by a certified translator. The translation should accompany the original apostilled document. MCA and other authorities in India accept only English-language documents for company incorporation purposes.

While there is no statutory validity period for apostilled documents, best practice is to use documents apostilled within 6 months of filing. Address proofs and bank statements should not be older than 2 months from the application date to ensure current information.

Yes. The Apostille Convention was already applicable in Hong Kong and Macau Special Administrative Regions before mainland China's accession. Documents from these regions can be apostilled by their respective authorities and are valid for use in India.

Key documents requiring Apostille include: Certificate of Incorporation of the parent company, Memorandum and Articles of Association, Board Resolution authorising India investment, Passport copies of foreign directors/shareholders, and Address Proof of foreign individuals. Power of Attorney (if applicable) should also be notarised and apostilled.

FC-GPR (Foreign Currency-Gross Provisional Return) is a form filed with the Reserve Bank of India to report share allotment to foreign investors. It must be filed within 30 days from the date of allotment through the FIRMS portal (https://firms.rbi.org.in). This is mandatory for all FDI transactions under the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019.

Capital must be remitted through proper banking channels from the foreign investor's bank account to the Indian company's bank account. The remittance must comply with FEMA regulations. Cash transfers, informal channels, or personal accounts of individuals are not permitted for FDI transactions.

Yes. Dividends can be repatriated after payment of applicable taxes, including Dividend Distribution Tax or withholding tax as per the Double Taxation Avoidance Agreement between India and China. Capital can be repatriated upon exit or winding up, subject to RBI guidelines and applicable tax clearances.

Yes. Every Private Limited Company in India must undergo an annual statutory audit by an independent Chartered Accountant under Section 139 of the Companies Act, 2013. This requirement applies regardless of turnover, profitability, or whether the company has commenced business operations.

GST registration is required if aggregate turnover exceeds INR 20 lakhs (INR 10 lakhs for special category states) or if engaged in inter-state supply of goods/services. For e-commerce operators and certain specified categories, registration is mandatory regardless of turnover. Most foreign subsidiaries register for GST at incorporation to enable input tax credits.

Form INC-20A is a declaration filed within 180 days of incorporation confirming that subscribers have paid the value of shares agreed to be taken, and the registered office is verified. The company cannot commence business or exercise borrowing powers until this declaration is filed with the Registrar of Companies.