Incorporate a company with Indian resident founders

You can use Stripe Atlas to create a US company while complying with the Reserve Bank of India’s Overseas Direct Investment (ODI) regulations.

This guide only applies to:

1. Residents of India for FEMA purposes: FEMA defines a resident as someone who has lived in India for more than 182 days in the previous Indian financial year and hasn’t permanently relocated out of India in the current financial year indefinitely. If you aren’t a resident under FEMA, you don’t need to complete any additional steps to use Atlas.
2. Indian founders seeking to raise venture capital with a US C corp: Small business owners who don’t want to raise outside capital can incorporate a US LLC using Atlas without extra steps, provided they transfer less than 250K USD of their personal funds into it each year.

Key takeaways for Indian founders

1. Incorporate an Indian Limited Liability Partnership (LLP) before using Atlas: Indian founders typically establish an Indian LLP before incorporating a US business because they’re prohibited from personally controlling a foreign entity that owns an Indian entity. You can form an Indian Private Limited Company (Pvt Ltd) for local operations in India at a later date.

2. Use Atlas to incorporate a US subsidiary of the Indian LLP: Indian founders can form a subsidiary using Atlas. This creates a US C corp that can be owned by one or more Indian LLPs. Atlas doesn’t automatically execute founder stock purchases in subsidiaries, so you can comply with ODI rules by reporting your LLP’s purchase of your US subsidiary’s stock in advance. You don’t need advance permission to pay the Atlas service fee using a debit or credit card.

3. Report US subsidiary stock purchase to an Authorized Dealer Bank: After incorporating a US subsidiary with Atlas, you must obtain a unique identification number (UIN) for the US subsidiary and purchase stock in it using your LLP’s Authorized Dealer Bank (AD bank). After you complete this process, you can form an Indian Pvt Ltd under the US subsidiary for local operations outside of Atlas.

Incorporate a US subsidiary

To incorporate a US C corp subsidiary for one or more Indian LLPs:

1. Form an Indian LLP for each Indian resident founder: LLP formation in India typically takes 2 weeks. Each LLP requires at least two partners, usually including the founder and a family member who owns a small percentage (for example, 0.1%). Indian compliance advisor Inkle has provided an overview of the LLP formation process. You can contact Inkle (incorporate@inkle.io) if you need support in forming an LLP. If you already have an LLP, you don’t need to create another one.
2. Open a bank account for each LLP with the same AD bank: Each LLP needs to open a bank account at the same Authorized Dealer Bank (AD bank) to avoid delays later in the process. Let the bank know you’re interested in ODI services so it connects you with the right account manager.
3. Incorporate a US subsidiary using Atlas: You or one of your co-founders need to follow the steps below to complete an Atlas application. If you have co-founders, they’ll receive emails inviting them to sign your application after you submit it.
   1. On the Welcome page, click Let’s go!.
   2. In the Structure section, choose Subsidiary.
   3. In the Subsidiary section, enter the name of your US C corp and the name of the Indian LLP owned by the founder filling out the Atlas application. If you have co-founders, you don’t need to enter their LLP information.
   4. In the Description section, briefly explain the purpose and activities of your US subsidiary, and share a website or social media profile associated with your startup.
   5. In the Founders section, enter the personal details of the team member filling out the application, and the names and email addresses of your co-founders, if applicable.
   6. In the Ownership section, review the instructions carefully.
   7. In the Roles section, assign founding team members to the board, and President and CEO roles.
   8. In the Tax ID section, choose the US subsidiary’s address and contact number, and share the US social security number (SSN) of the team member filling out the application, if they have one.
   9. In the Summary section, review your entries before signing the application.
   10. In the Sign section, click Download documents for review to download your draft incorporation documents. Share the documents with your AD bank account manager so they can begin the process of applying for your US subsidiary’s unique identification number (UIN).
   11. In the Pay section, pay using a personal debit or credit card.
4. Authorize each LLP to purchase stock in the US C corp: Fill out and sign Atlas’ template LLP stock purchase resolution. Each LLP must purchase a quantity of stock based on their ownership percentage of the US subsidiary, assigned to them in the Atlas application. For example, if one of your co-founders was allocated 50% of the US C corp’s stock in your Atlas application, they must purchase 500 of the company’s 1000 shares. Each share is initially valued at 0.10 USD, so total ownership is worth 50 USD.
5. Sign vesting agreements with your US C corp: Fill out and sign the common stock purchase agreement and board consent templates for Indian founders. You don’t need a lawyer to do so. However, we encourage you to contact a startup lawyer in India if you have any questions about the documents or if you need assistance in drafting your own common stock purchase agreement and board consent.
6. Invoice each LLP for the value of its US subsidiary stock:
   1. Set up a bank account for your US subsidiary. You can open an account with any bank. However, we recommend using one of our partners, Brex or Mercury, because they allow Atlas companies to bank before their EIN arrives.
   2. Send an invoice from your US C corp to each LLP for the value of each LLP’s stock as listed in its LLP stock purchase resolution from step 4. Make sure the line item on the invoice contains “Initial US C corp capitalization.” You can use Stripe Invoicing before your US subsidiary’s EIN arrives or another invoicing tool after your EIN arrives. To apply for Stripe payments after your US subsidiary is incorporated, go to the Charge your first customers section in the Overview tab of the Atlas Dashboard, then click Activate.
7. Purchase equity in your US subsidiary:
   1. Contact your AD bank account manager to complete the UIN application process and initiate the purchase of stock in your US subsidiary. This requires submitting Form FC along with your bank’s version of Form A2. After the bank processes the forms, it transfers the payment for each LLP’s equity to the US subsidiary from the respective LLP’s account. If any of your co-founders aren’t Indian, learn about how they can purchase equity in the US C corp.
   2. Consider filing a Section 83(b) election with the US IRS using our template. Read our FAQ to find out if it would benefit you to file an 83(b) election.
8. Provide a share certificate to your AD bank: Within 6 months from the date your payment was sent, each LLP must provide a share certificate from the US C Corp to its AD bank. We recommend creating share certificates using a cap table provider, such as Carta or Pulley. (Atlas founders receive 20% off their first year with both platforms, and can create share certificates free using Carta Launch if they’ve raised under 1 million USD)

Don’t consider this guide as legal or professional advice. We recommend seeking independent legal advice and engaging with your AD Bank to understand all obligations stemming from overseas direct investment.

Popular services for Indian founders

Atlas developed this guide in consultation with law firms, banks, and cross-border compliance advisors with expertise in ODI compliance for Indian startups.

Contact these experts if founders if you have questions related to each company’s field of expertise. Stripe isn’t compensated by any of these companies.

• Inkle, an Indian startup compliance advisor, shared information about corporate structuring and ODI best practices for startups. Atlas founders can contact them at incorporate@inkle.io for Indian entity formation, and tax and accounting advice.
• JSA, a major Indian law firm with a dedicated startup practice, advised us on Indian legal matters. Contact them at pro-team@jsalaw.com for Indian legal support.
• Cooley, a leading US law firm for startups, advised us on offering legal templates for Indian founders. Atlas founders raising US VC can contact them at zCooleyAtlas@cooley.com for US legal advice.

See also

Stripe Atlas for Indian Founders FAQs