Registration of biz by foreigners gets tougher

Registration of biz by foreigners gets tougher
Preetu Nair, TNN

PANAJI: Foreign nationals wanting to register a company in India will need to have their signatures and addresses on the memorandum of
association, as well their proof of identity notarized by a notary of the country of their origin.

The registrar of companies, Goa in a circular sent to the association of chartered accounts and company secretaries, on December 19, 2008 said that for registration of foreign companies or of companies by foreign nationals it is now mandatory that "the signatures and alteration in the memorandum of association and proof of identity, wherever required, should be notarized before the notary of the country of their origin and be duly apostilised (registered)".

This is in accordance with the Hague Convention, 1961 and the ministry of corporate affairs notification of December 4, 2008 on the issue.

"This will ensure that foreigners who invest in businesses in India have proper documents for registering the company, and will also keep a check on people with a dubious record getting into business here. Even ambiguity regarding incorporation of companies will be done away with," said Sanjay Gupta, Registrar of Companies, Goa, Daman and Diu.

Advocate Vikram Varma, legal advisor to several foreigners who have established businesses in Goa said, "After the recent crisis in the international market, such additional checks and balances for companies being floated in India is absolutely essential," said Varma.

Before the enforcement of this notification, the memorandum of association was prepared by a chartered accountant, company secretary or lawyer in India and foreign investors filled up their personal details and signed the documents in presence of these, and the proof of identity (passport) was certified by the three, or a notary in India.

"We have been side-stepped by the government. The Indian government now wants the signatures of the foreign investors to be attested by a notary in their country, which would also be countersigned by the Indian embassy. This will delay the process," said chartered accountant Lalit Shah.

Several foreigners who have established businesses in Goa have come under the scanner as it was alleged that some with a dubious record had formed companies with the sole purpose of purchasing property in India. Gupta added, "We can't stop any foreigner from setting up a company in India. But now, in case of any discord, we can track down the foreigner and produce them before the law."

22 Jan 2009, The Times of India, Goa edition