Legal Question in Business Law in India

Re: International Subsidiary

This is a complex question, involving multiple laws in two countries, this is not the forum to answer, consult an attorney of your choice, and get proper advise, as this question needs a specific answer.

Re: International Subsidiary

Hire an attorney. This forum should not be used for such a complicated matter involving international laws and taxes.

Re: International Subsidiary

It is my understanding that a corporation was already formed in New York. Therefore, you must domesticate the New York corporation in India.

I am not familiar with India law. I would suggest contacting counsel in that country.

Mike.

Re: International Subsidiary

This is a very complex question. Much of the way that you do this will be dictated by tax considerations for both yourselves and the partners in India. One thing that you can NOT do is just issue stock in the S-corp to the Indian "partners". Your corporation will lose its S-status.

You should contact an attorney. Please feel free to give me a call at (212) 695-6400 if you would like to discuss this further.

Best of luck.

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WARNING: This information is not intended to constitute legal advice and should not be relied upon for any purpose in lieu of consultation with appropriate legal counsel in your own jurisdiction.

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Re: International Subsidiary

Dear Sir,

This is with reference to your mail dated September 18, 2003.

We understand that you are interested in establishing the operations in India, while retaining your status as Foreign Company. As per the Indian law, a Foreign Company may carry on operations in India:

� through a Branch Office;

� through a Project Office;

� through a Liaison Office;

Foreign Company has been defined as a body corporate incorporated outside India, including a firm or other association of individuals under Regulation 2(b) of Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations, 2000 under the Foreign Exchange Management Act (FEMA), 1999. Prior permission is required to be obtained from the Reserve Bank of India under the above said regulations for carrying on operations in India through branch or liaison office.

Necessary application in prescribed form is required to be filed with Reserve Bank of India (RBI) along with the necessary Annexure and the requisite fees. RBI after considering the facts and figures provided for, decide to grant the approval. However, the branch/project/liaison office could undertake the permitted activities only.

Besides, business may also be set up in India by incorporating a company, which may either be a Wholly Owned Subsidiary or a Joint Venture Company. The advantages of operating through an Indian Company can be broadly outlined as follows:

� Insulation to Parent Company against liabilities of the Indian Company;

� Payment of technical fees on account of Technical Know-how Agreement with Parent Company;

� Repatriation of full dividend after payment of applicable tax;

� Lower rate of income tax.

We can provide you with further inputs only on the receipt of inputs on the nature of business to be undertaken.

In case you require any clarification/information please feel free to contact us.

Thanking you,

Yours truly,

Dubey & Partners

310, New Delhi House,

27, Barakhamba House,

New Delhi - 110 001

Phone + 91 - 11-23323884/ 51511473

Fax + 91 - 11 - 23323890

E-Mail : [email protected] , [email protected]

Disclaimer

Actual resolution of legal issues depends upon many factors, including variations of fact and applicable laws. This information is not intended to provide legal advice on specific subjects, but rather to provide general insight of legalities involved upon the query raised. The reader should always consult with legal counsel before taking action on matters covered by herein.

Re: International Subsidiary

Careful consideration should be given to forming a business entity in India and then having it enter into a written Joint Venture Agreement with the US/NY S corporation. Alternatively, an S corporation (assuming it has been properly formed under NY law with all required corporate legal documents and records) can be changed into a C corporation, which would permit US and India individual person shareholders to participate in the business activities. Creating different classes of stock, etc. should also be explored. The Federal, New York State, and India tax and business law consequences need to be carefully considered by qualified US and India tax/business counsel working together before any course of action is taken concerning the business entity.

An experienced business/tax attorney working with qualified counsel in India should be able to handle this type of matter and to protect the interests of the client. Please note that my legal services are available only with a signed engagement agreement in accordance with the Code of Professional Ethics applicable to attorneys licensed in New York. If I can be of any help to you or people you know, contact me as I would be pleased to provide legal and tax support. Sincerely, Robert Beatson II, 9-17-2003, 8:35 p.m. EST Law Offices of Robert Beatson II, 9818 Glynshire Way, Potomac, MD 20854 Tel/Fax 301-340-2951 email: [email protected] website: www.beatsonlaw.com Practice areas: Tax, business law, computer/high tech/biotech law, intellectual property, trusts/estates/wills, real estate. Licensed to practice law in: DC, MD, VA, and NY.

Re: International Subsidiary

To establish an operation in India legally, you should incorporate a new company in India with the same name; however the articles & memorandum of association of the Indian company should specify that the Indian company is a sister concern of the US company. The promoter directors of the indian company should also be those in the US company. I can not advise you on the taxation angle, without looking into more papers.