Market entry in India through business incubator, own establishment,
Joint Venture or acquisition
There are several ways to enter the Indian market. IndiaConnected offers you the opportunity to set up your office in India quickly, easily and cost effectively without having to register your own entity. We call this the business incubator. Of course, we can also assist you in setting up your own entity in India (Pvt Ltd.), in setting up a partnership with an Indian company(joint venture) or if you want to acquire an Indian company(M&A). Please find below information on the various possibilities for setting up your business structure in India.
Business incubator
The business incubator is a low-threshold and cost-effective way of achieving your market entry in India.
Accessible
Own employees
No legal liability and responsibilities (lies with IndiaConnected)
Easy exit
Cost-effective
No governance issues
No expenditure on setting up own entity and additional compliance
No audits
No share capital required, expenses can be included in the profit and loss account in the home country.
What does the Business Incubator entail?
Export to India and sales processes through existing IndiaConnected structures in India.
Existing administration structure and control mechanisms for your Indian employees.
Use of our Office Management Services at four locations across India (optional).
Transparency and monthly reports (tailored to customer requirements).
Partner in India with over 20 years of experience.
All the advantages of the business incubator at a glance:
Own organisation with well-organised processes and structures, without the costs of an own branch office.
No compliance costs, no audits, no transfer pricing, no registrations required. So you can easily save 1,000 to 2,000 euros per month.
Your own employees on our payroll with well-organised control mechanisms (according to your needs).
Flexibility to grow.
No costs for setting up your own entity, no share capital to contribute, expenses can be included in the profit and loss account in the home country.
An experienced, professional sparring partner in India with over 20 years of experience and an office network throughout India.
All back offices under one roof.
Own entity (Pvt Ltd, LLP or Branch Office)
Establishing your own entity in India is a complex, time-consuming and frustrating process. We can advise you on the establishment and relieve you of this process. We ensure that you can submit the right forms on time, apply for the necessary registrations, register with the Reserve Bank of India, assist in opening a bank account. In doing so, we facilitate and accelerate the establishment of your own entity in India.
For example, we help you set up your own entity in India:
We list the advantages and disadvantages with regard to legal forms, liability and taxation. We advise you on the legal form that best suits your specific situation.
We will map out which financing options you have for starting up and/or structurally financing your planned Indian activity.
We will fully support you in registering your company and getting it operational in India, from registering a Pvt. Ltd. to opening a bank account, appointing a local accountant and organising (local) funding for your company.
If you do not yet have an Indian director in mind, we will support you in drawing up a suitable search profile and recruit suitable candidates on the basis of that profile.
We provide tax and legal advice on the best strategy for both the establishment and long-term growth phases.
We advise you in protecting your intellectual property in India.
Joint Venture (JV), merger or business acquisition (M&A) in India
Cooperating with an Indian company can be a good way to enter the Indian market. With a good Indian partner, you immediately have an extensive network, knowledge of the market and you share the business risks. But such a partnership does not always run smoothly, as in the case of McDonalds. How do you find the right partner in India? What agreements do you make with the Indian party? And what is the value of everyone's contribution? IndiaConnected helps companies with this as a confidant and sparring partner. We support parties during the entire process: from partner search to due diligence and negotiations.
These are the advantages of a Joint Venture:
Direct access to local products
Good staff
Existing infrastructure
Market experience
This is what you need to think about when setting up a Joint Venture:
Memorandum of Understanding: To ensure that all parties fully understand and agree on the purpose, responsibilities and risks of the joint venture, a memorandum of understanding (MOU) is strongly recommended. The MOU is a short document without a lot of legal jargon. The MOU lists the tasks of both parties and lays down a roadmap for the future on, for example, the parties' intentions, management structure, cost allocation, etc.
Due Diligence: Before your company establishes a new entity with an Indian partner, it is highly advisable to conduct due diligence just like any other business transaction. This could involve a search of the potential partner's background in public documents, but in most cases, it is advisable that a formal due diligence is done to gather all necessary information.
Companies Act 2013: Most joint ventures in India are structured in the form of private limited companies. It is mandatory for a private limited company to have at least two directors and at least one resident Indian director (i.e. a director who has been resident in India for a period of at least 182 days in the preceding calendar year). In a private limited company, the Articles of Association ('AoA') are a very important document. The AoA is a requirement for setting up a private limited company in India and contains regulations for the internal management of the company. Read more about the Companies Act 2013.
Articles of Association: The Companies Act, 2013 gives companies the freedom to determine the contents of the AoA. For example, the AoA contains an options clause in case of conflict or termination of a joint venture in case of impasse. It is therefore advisable to devote time and attention when drafting the AoA and not to depend on a standard off-the-shelf concept, especially in the event that one of the joint venture parties is a foreign company.
Registrar of Companies: The Companies Act, 2013 requires every company to have an MOU and AoA. The MoA and AoA are the charter documents of the company. The MOU and AoA must be filed with the Registrar of Companies ('ROC') of the respective province where the foreign company intends to establish itself.
Joint Venture Agreement
The MOU and the AoA then form the basis for a Joint Venture Agreement ('Agreement'). This is a working document that explicitly focuses on decisions of the partners concerning, for example, the shares, management structure, withdrawal rights, competition issues, dispute resolution, intellectual property rights and any guarantees. The Agreement is between the partners and is not binding on the joint venture company, provided the relevant terms are also included in the AoA of the joint venture company.
Therefore, Indian law provides sufficient flexibility to the parties to set out their own arrangements in a final agreement. The mutual relationship, rights and remedies depend on what the parties have agreed in the Agreement and Articles of Association. Unless these conflict with local law, private agreements between parties must be taken into account.
The Agreement or other agreements relating to the joint venture necessarily require skill in drafting the documents with no room for ambiguity. Complicated and vague documentation can be fatal to the joint venture and impede the interest of the parties.
One of the things that requires such expertise is the exit strategy. The agreement establishing a joint venture must include a planned exit strategy so that all parties are protected once the partnership has reached its goal.
By including termination terms in the contract, joint venture partners can protect themselves from conflicts with other participating companies. Most joint ventures are dissolved through a partner buy-out, but the addition of clear termination terms in the Agreement can determine what the transaction means for each partner.
As soon as the parties have determined the key critical points for an Agreement, it is therefore advisable to ask an urist in India to take over the case. He can - taking into account the Indian laws and regulations - convert the key points into a Joint Venture Agreement.
