Setting Up or Running a Business in India as an NRI — Done Right

The first decision an NRI investor makes — the legal form the business will take — quietly shapes everything after: liability exposure, how easily you can raise outside capital later, the annual compliance burden, and how cleanly you can exit or repatriate profits. Getting this right at the outset avoids a costly restructuring exercise later, which is far more common than first-time NRI entrepreneurs expect.

For most NRI-owned businesses, the realistic choice narrows to three structures — a Private Limited Company, a Limited Liability Partnership (LLP), or, in narrower circumstances, a Branch or Liaison Office of an overseas company you already own. Each suits a different investment goal.

A note on Branch and Liaison Offices: a Liaison Office cannot undertake commercial activity or earn local income — it exists purely for representation and market research — while a Branch Office may undertake a defined set of commercial activities but not manufacturing or retail trading directly, both requiring prior RBI/AD Category-I bank approval to establish. This route matters mainly to NRIs who already run a company abroad wanting a limited Indian foothold; an NRI starting a genuinely new venture is almost always better served by a Private Limited Company or an LLP.

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Section 149(3) of the Companies Act, 2013 requires every company incorporated in India — regardless of whether every other director or shareholder is an NRI or foreign national — to have at least one director who has stayed in India for a total period of not less than 182 days during the previous financial year. This single requirement surprises many first-time NRI founders who assume an entirely overseas board is possible; it is not, and structuring around it correctly from day one avoids an incorporation held up at the last stage.

• DSC & DIN: A Digital Signature Certificate and Director Identification Number are obtained for every proposed director, including you as the NRI/OCI director.
• Appointing Your Resident Director: A trusted India-based family member, professional nominee director, or associate who meets the 182-day residency test is appointed, with the role and its limits documented in board resolutions and, where appropriate, a separate indemnity or nominee agreement to protect your control.
• Name Reservation & SPICe+ Incorporation: Company name approval and incorporation are filed through the MCA's SPICe+ integrated form, typically completed within 7–10 working days once documentation, DIN, and DSC are in place.
• Bank Account & FDI Reporting: Opening an Indian current account and, where foreign capital is infused, filing Form FC-GPR within the prescribed window after share allotment.
• Quarterly & Annual Board Compliance: Board meetings at prescribed intervals, an AGM within six months of financial year-end, and statutory registers maintained on an ongoing basis.
• Annual ROC Filings: AOC-4 (financial statements) and MGT-7/7A (annual return) filed within their statutory windows after the AGM, along with DIR-3 KYC for every director.
• Ongoing FEMA & Tax Coordination: The annual FLA return to the RBI where applicable, coordinated closely with your Chartered Accountant for income tax and GST filings.

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Not every NRI client we advise is starting a new company. Many already hold a stake — 15%, 30%, sometimes an equal one-third — in a family business back home that a parent, sibling, or cousin runs day to day. This is one of the most common and least discussed corporate legal needs among NRIs: not building something new, but making sure what you already own is properly documented and protected before informal family understandings quietly break down.

Family businesses in India are frequently run for years on trust rather than paper — no shareholder agreement, no clarity on who can allot new shares or draw what remuneration, no succession plan if a promoter passes away, and no agreed mechanism for an NRI shareholder to exit or be bought out fairly if the relationship sours. None of this is a problem while everyone gets along; it becomes an expensive one the moment they don't.

This is advisory, preventive work — putting protection in place before a dispute exists. If a dispute has already crystallised in a company you hold shares in — information being withheld, dividends stopped, a dilutive share allotment, or exclusion from the board — that is a litigation matter handled by our separate NCLT and shareholder dispute practice for NRIs, which represents minority shareholders before the National Company Law Tribunal. The two are deliberately different services: this page is about getting the paperwork and governance right early; that one is about fighting for your rights once things have already gone wrong.

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