Uk-Based Software Company – Business Set Up in India
The Client —
A UK-based Software company with 100 employees in London wanted to open an Indian office to serve its growing base of Indian enterprise customers. They needed a legal entity in India, FDI-compliant ownership structure, the right inter-company agreements, and all the registrations needed to start billing Indian clients directly.
The founders had never set up a company outside the UK before. They'd spoken to two large law firms in Delhi — one quoted them ₹8 lakh for the incorporation alone, the other couldn't start for six weeks. A mutual contact in the Noida tech community referred them to SPJ Advocates.
The Problem
Setting up an Indian subsidiary for a foreign parent is more complex than a normal company registration. Several additional layers of regulation apply:
- FDI Route and Sector Compliance: FDI rules must be checked to confirm whether the sector allows automatic investment or requires government approval. In this case, the sector allowed 100% FDI under the Automatic Route, which still needed proper documentation.
- FEMA Compliance and RBI Reporting: Under FEMA, foreign investments must be reported to the RBI within 30 days through Form FC-GPR. Missing this deadline can lead to penalties.
- Transfer Pricing and Inter-Company Agreements: Inter-company transactions must comply with transfer pricing rules, requiring a properly drafted services agreement from the start to avoid tax issues.
- Indian Director Requirement: Indian law also requires at least one resident director. Since the founders lacked a local contact, this had to be addressed through a local hire or a temporary professional director.
- Registrations Needed Before the First Invoice: Finally, before issuing invoices, the company needed key registrations including PAN, TAN, GST, IEC, professional tax, and Shops & Establishment—each with separate processes and timelines.
What SPJ Advocates Did?
- Private Limited Set up: We confirmed that software services fall under the Automatic Route with 100% FDI allowed and set up a wholly-owned subsidiary as a Private Limited Company in Noida , as it allows full operations and revenue generation. We structured the share capital at ₹10 lakh authorised and ₹1 lakh paid-up for efficient compliance.
- DSC & DIN: We handled DSC and DIN for the UK director and arranged a temporary resident director until a Country Manager is hired.
- Name reservation, filing: The company name was reserved and SPICe+ filed, including apostilled documents for the foreign director. Incorporation was completed in 25 days.
- Compliance: We filed the FC-GPR within 3 days of allotment, ensuring RBI compliance, and managed KYC and banking formalities for foreign investment.
- Agreements Drafting: We also drafted the inter-company services agreement covering scope, IP ownership, data protection, and exit terms. It was approved with minor revisions.
- GST, IEC, and Taxation: We completed GST, IEC, Professional Tax, and Shops & Establishment registrations, making the company fully operational.
- Employment Contracts: We drafted Employment contracts as company want to hire 5 employees in India immediately. Employment contracts includes probation period, notice period, non-compete and non-solicitation clauses, IP assignment provisions, and confidentiality obligations.
The Result
- Subsidiary incorporated: Wholly-owned Private Limited Company registered in Noida in 25 working days
- FDI compliance: FC-GPR filed with RBI within 3 working days of share allotment — well within the 30-day deadline
- Inter-company agreement: Drafted, reviewed by UK lawyers team, and signed — transfer pricing compliant from day one
- All registrations complete: GST, IEC, Professional Tax, Shops & Establishment — all in place before the first Indian invoice
- Employment contracts: 5 India-compliant contracts drafted plus reusable templates for future hires
- First Indian invoice: Raised within 48 hours of GST registration approval
What Happened After
After the business setup was complete, the UK company signed a monthly legal retainer with SPJ Advocates to handle ongoing Indian compliance — annual ROC filings, GST returns, employment matters, POSH matters, and Commercial Disputes as the team grew, and transfer pricing documentation for the annual tax filing. They've been a retainer client for over two years now, and the Indian team has grown from 5 to 32 employees.
