One Point of differentiation about NRI Group is, we have the clarity about end to end process & at no point there is ambiguity experienced in the process flow.
India is going through a period of unprecedented economic liberation, opening its vast consumer base to international firms. However, it is a notoriously difficult place to do business, and having local help on board is the key to unlocking the country’s vast economic potential.
Protecting Investors and enforcing contracts
The concept of investor protection is one that has garnered a lot of attention of late, and new bodies such as the Securities and Exchange Board of India (SEBI) have been set up to that effect. Enforcing contracts will also be an area that must be looked at. It takes sometime an average of 1,420 days and having local help can really make the difference to the success of your venture.
Different countries have various official documents that are available to show a company’s eligibility to conduct their business and show compliance. These are often requested as part of the due diligence process for new business relationships, or acquisitions or to access funding.
Whether you are a small business operating in a single country, a company operating in multiple jurisdictions or a multinational organization – We can obtain official documents such as:
Certificate of Good Standing, Articles of Association, Certificate of Compliance, Disclosure Certificate, Proof of Formation, and Entity Status Checks.
Like any other property purchase, commercial real estate investing too calls for a fair share of due diligence.
Check the developer credentials, potential for infrastructure development, access to public transport and quality of property management in the project.
"If you are an investor looking at an income producing office asset, look at the break-up of cash flows, the vacancy factor, expenses such as maintenance, property tax and building insurance, lease term, lock-in period and expiry dates, long-term capital appreciation potential, and refurbishment, refinancing and repositioning potential"
Attitudes towards Authority
Traditionally a caste society with roots in Hinduism, Indian culture places a high importance on authority and status. Communication between levels is relatively closed so valuable insight or suggestions from employees in lower positions will rarely be shared with their superiors. Without understanding the complexity of Indian attitudes to authority and how they impact business, organizations doing business in India will struggle to implement change as quickly as necessary, and fail to harness the experience and value of its employees. NRI Group can help you overcome these difficulties.
Concepts of Time
India is a polychromic culture, in other words, people tend to change priorities depending on their importance and attitudes towards punctuality are relaxed. Most large global organizations require adherence to strict deadlines and fast decision-making, so they struggle to cope with the idea that when doing business in India, time cannot be controlled and is not absolute. NRI Group can help you better understand Indian concepts of time and develop strategies for dealing with them.
The Indian business culture focuses a lot on relationship and trust building rather than working hard and quick towards specific business objectives. We will help you develop strategies to avoid the immense frustration, delayed projects, failure to reach tangible results and general clash as a result of different preferences for relationships and tasks and processes. NRI Group can help you developing business relationship with Indian companies.
U.S. companies have invested nearly $19 billion in India in the past year. If you have not yet entered this vibrant market, chances are you will soon. Although the Indian market has tremendous opportunities, you should bear in mind that when doing business in India, you will be expected to comply with all U.S. rules of operation, U.S. foreign business rules and India-specific business rules. To help you navigate this, following are five important compliance issues that are often overlooked but have led to significant consequences for U.S. companies doing business in India.
1. REPORTING FOREIGN BANK ACCOUNTS
If doing business in India, you will likely have Indian bank accounts. These accounts have the potential to cause strict compliance obligations. The IRS requires all taxpayers who hold $10,000 or more in a foreign bank account to file annual Foreign Bank Account Returns (FBARs). The Obama administration’s emphasis on reigning in tax evasion has led to the much-publicized IRS Voluntary Disclosure Program and crackdown on unreported income from foreign accounts. However, Swiss Bank accounts are not the only targets.
Indian bank accounts have become the “new” Swiss banks, with the DOJ bringing several cases against those of Indian descent in the U.S. Pressure has been so great that HSBC, the well-known international bank with a substantial presence in India, has issued warning letters to its clients with Indian bank accounts informing them that the IRS is attempting to obtain their names.
The FBAR is deceivingly easy to complete, and complications arise because its expansive filing obligation includes the company as well as the individual(s) with signature authority over the account. Despite being recently clarified, the definition of signature authority is still tricky, and it is imperative to seek professional guidance to analyze your company’s operations and determine which individuals must file.
The penalty for noncompliance is significant and can include a major financial penalty and/or jail time. Even noncompliance in error has a heavy penalty. So it is important to get it right from the outset. NRI Group team can help you getting this done for you.
2. EMPLOYMENT COMPLIANCE
While more of a business issue, employment compliance is also an issue that many companies doing business in India initially overlooked and suffered consequences for doing so. There are three main reasons why this issue is critical:
- More Jobs than Employees: Experienced employees are always in high demand in India because there are more job opportunities for highly skilled workers than there are employees for the positions.
- The Grass is Always Greener: It is all too common for a junior employee to make his career by joining a foreign company, and then use this resume booster to quickly get another job.
- Poaching is Prevalent: Poaching is rampant in India, meaning your competitors may actively solicit your employees.
For these reasons, businesses often run into challenges attracting and retaining top Indian employees. Consequently, businesses should ensure their employment agreements, including nondisclosure, confidentiality and noncompeting provisions, are carefully drafted.
Some general guidelines are that such provisions are enforceable in India and should include (i) the time period (typically 2-3 years), (ii) scope and extent (e.g. customer list, nature of work, industry restrictions, etc.), (iii) geographical restrictions, and (iv) clauses that are accepted in lieu of consideration (since consideration is not required in India). The provisions should also be reasonable and should be agreed to only after consulting independent counsel and with the express understanding of both parties.
From a legal perspective, just as in the United States, India’s employment laws are governed by both central (i.e. federal) and state law. Each state has different employment laws and a complex judicial system whose judgments must be monitored and employment policies and agreements adjusted accordingly.
An unfortunate difference between the U.S. and India is that in India, these clauses are treated differently during employment and after termination of employment. During employment, expect comparable treatment by Indian courts as from U.S. courts. However, after termination, expect difficulty enforcing the provisions because Indian courts view them with suspicion, with recent cases requiring a stricter burden of proof before enforcement.
3. TECHNOLOGY COMPLIANCE
As technological advances occur, we can expect changes in the law to follow suit. But while technology develops quickly, laws change slowly. A great example is cloud computing, which simultaneously revolutionized the way business is conducted and raised legal issues regarding data protection and liability allocation. Your company must ensure it has policies in place for monitoring these changes, explaining changes to key personnel, and ensuring personnel are enforcing compliance with these rules.
Given that healthcare (patient information), financial services (company financial statements), and defense (national security details) are three of the most prominent industries in India, maintaining a high level of information security is critical. These industries deal with valuable confidential data and if such confidential data is compromised, it could lead to serious consequences for the business and its customers.
There are a myriad of state and federal laws, and more on the way, affecting these issues. While the specifics of compliance may change, there are some constants that will always need to be reviewed such as service level agreements (SLA’s) between your company and your vendor(s), record retention requirements, securities compliance and electronically stored information (ESIs).
4. THE FCPA
When doing business in India, it’s most important to set up proper FCPA policies on the outset. Know your employees and partners and ensure they understand the importance of FCPA compliance and buy into the system.
We want to point out a focus often neglected: hiring the right people. For example, it is never a good idea to hire an employee’s cousin’s friend who “knows how India works.” You would be surprised how often this occurs. Instead, work with people you know well and, if you don’t know anyone, hire people who understand “international standards,” NRI Consulting Group can readily confirm their background and experience. Yes, it may be costlier, but it is better to go with the safe bet and pay for consultants and advisors up front rather than addressing an FCPA violation down the road.
5. INDIAN EMPLOYEES & PARTNERS MUST GET WITH THE compliance
Too often, people focus on proceeding rapidly in India and improving their bottom line but overlook the impact that compliance can have on every aspect of business. You must ensure compliance is regularly addressed and stressed as critical; a mere nod of acceptance at the beginning of employment or the partnership relationship is not sufficient.
At the end of the day, it is your company that is liable for the actions of your employees and partners. Yes, it can be a complex legal formula to determine liability, but you can limit liability by stressing the importance of compliance and regularly monitoring the actions of your employees and partners.
Doing business in India
Once you are established in India we could advise on a range of tax, economic and corporate laws in India besides helping you set up procedures to comply with the requirements associated with these laws. These include:
- Being your authorized representative in India and even run your virtual office in India where a physical office infrastructure is not required, particularly in the early days!
- Representing you before the Indian tax and other regulatory authorities on your behalf
- Advising you on transfer pricing rules considering the Indian and UK tax laws
- Providing monthly management accounting and reports
- Payroll processing, and complying with employment and tax laws
- Being your statutory auditors and performing annual statutory audit
- Company secretarial services including event-driven and periodic compliance
- Advising you on repatriation of funds from India, and helping you with the law and procedures with regard to repatriation of income / assets from India including advice on withholding tax implications
- Devising and implementing appropriate accounting and internal control manuals for your business in India
- Advising you on the corporate governance laws and procedures in India
- Advising on internally re-organizing the business through share buy-backs and capital reductions considering the India tax and regulatory environment, to maximize benefits to the investors.
Transaction specific: we could also provide transaction specific advice in India regardless of the country you’re based in:
- Help you obtain approval from the Reserve Bank of India (RBI) for purchase/sale of residential and commercial property.
- Issue opinions on a specific area of the tax law in India
- Carry out tax due diligence on an Indian business
- Provide transaction support services like due diligence, deal structuring and coordinating with other professionals
- Specific advice on foreign exchange regulations affecting a particular transaction, and Carrying out investigations