L'internationalization of the companies often involves the need to set up a company in the target country, i.e. the nation to which you intend to expand your business.
Among the most interesting destinations for Italian companies, theIndia It stands out as one of the most promising and dynamic markets, ranking fifth among the world economies.
For companies that want to enter this market, it is essential to know the different corporate forms available that can facilitate such entry. We have already discussed the different forms in another article corporate options provided for under Indian law, providing a general overview of them. In this article, we will focus on the Private Limited Company, analyzing its requirements and the major Indian law regulations that govern the functioning of companies in the country.
The legal instruments available to Italian companies that intend to export to India are governed exclusively by Indian law.
The two main recognized corporate forms are the Private Limited Company (PLC) and the Public Limited Company (PLC), both consolidated and widely used internationally.
The Indian regulatory framework also includes newer options, such as the Limited Liability Partnership (LLP), which combines the advantages of a partnership with those of a limited liability company. Despite these alternatives, the Private Limited Company remains the choice of choice, especially for SMEs that intend to start processes of internationalization in the territory.
The major sources of company law in India include:
These laws provide the essential regulatory framework for foreign and local investors who wish to establish a company or start business operations in the country.
The concept of limited liability company under Indian law is very similar to the Western one, offering a asset protection to the partners. In a Private Limited Company, therefore, the liability of the partners is limited to the subscribed capital, and this means that they are not obliged to cover the company's obligations with their personal assets.
The Memorandum of Association, or the company's articles of association, may provide for forms of limited liability with a guarantee for the members, such as the obligation to contribute to liquidation costs. In these cases, liability extends to liquidation costs, but not to debts incurred during ordinary business activity.
In addition to the Private Limited Company, there are several legal forms that companies can consider to start their business in India, especially in a corporate context. internationalization. The main typologies include:
All companies must be registered with the Registrar of Companies (ROC), the Indian equivalent of the Companies Registry. The ROC, along with the Company Law Board (CLB), deals with the approval of companies and the verification of compliance with the Companies Act.
A recent reform introduced the National Law Tribunal, a body that replaced the CLB in its control functions.
For Italian companies, especially small and medium-sized enterprises (SMEs), the Private Limited Company represents the most suitable legal form. This type of company offers more streamlined procedures than the Public Limited Company, making it ideal for those who want to enter the Indian market without facing excessive bureaucratic burdens.
The minimum requirements for setting up a Private Limited Company in India are as follows:
Once these requirements are met, the company can be registered with the ROC and start its operations in the Indian market.
There Private Limited Company offers several advantages to Italian companies, in particular with regards to the limited liability which we have already mentioned, which protects the personal assets of the partners. In addition, the possibility of establishing a company with foreign members at 100% represents a unique opportunity for those who wish to directly control the business without having to involve local partners.
The process of setting up a Private Limited Company in India requires some basic steps:
India today represents a highly attractive destination for strategies of internationalization of numerous Italian companies.
Octagona is ready to support companies from all sectors that wish to expand their business in the Indian market, offering assistance in setting up a company in the area.
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