FinTech Company Registration Process in India: Best Corporate Lawyer Advice in Delhi NCR
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Financial technology (“FinTech”) companies provide financial aid, planning, and management services to other businesses and individuals replacing the traditional method of providing financial services and banking. It is different from the bank and requires in-depth knowledge and guidance to start it.
Legal Procedures Involved for the Registration of FinTech Companies in India
The legal requirements and formalities for a start-up that plans to set up a FinTech in India are-
Deciding the Business Structure- The first step is to decide the business structure. There are three types of business structures suitable for FinTech companies- One Person Company, Limited Liability Partnership, and Private Limited Company. Out of these three, the most apt structure for FinTech start-ups is a Private Limited Company as in this business structure, the directors and shareholders of the company have no personal liability to the creditors and the company has its own identity different from the directors and shareholders. The company also has its rights and liabilities.
Registration for Goods and Services Tax (GST)– Once, the business structure is decided, the second step is to go for registration of GST. Registration for GST of financial start-ups in India is a must. It can be avoided at any cost. Once, the registration is completed, the financial business will obtain a six-digit Goods and Services Tax Identification Number (GSTIN). It is necessary as it plays the role of Tax Identification Number (TIN) which allows the governmental authorities to register the business within the Value Added Tax (VAT) system.
Furnishing Legal Documents– It is very important to get the following documents to start the finance business-
• Co-Founders Agreement- It is a contract between Co-Founders specifying the ownership, duties, liabilities of each co-founder, and initial capital investment.
• Intellectual Property Licensing Agreement- Under this agreement, the fintech start-ups will be authorised to unwaveringly transfer all, or even a portion, of the company’s intellectual property rights to an assigned party.
• Privacy Policy- Document stating the essential privacy and data protection standards outlined by our Information Technology Act.
• Website User Policy- Document highlighting the terms and conditions of use for website users
• Terms of use for mobile app users- Document highlighting the terms and conditions of use for mobile app users
• Vendor Agreement- Document establishing the ground rules for the quality of services provided, cost, liability, and duration, alongside various other conditions to be completed by the company.
• Product Development Agreement- It has a confidentiality clause, hiring process, and past and future ownership.
• Employment Agreement- It lays down guidelines of agreed-upon terms between the employer and employees
These documents need to be furnished for starting of the FinTech Company.
Obtain Intellectual Property– Intellectual property includes- Trademark, Design, Patent & Copyright. The FinTech company needs to obtain intellectual property for its brand name, slogan, logo, etc. So, that these can be protected and for that, the company needs to register for it. The company will get the copyright automatically but for other kinds of intellectual property, registration needs to be done necessarily.
Licensing– A license needs to be procured for the kind of service the company is providing. There are different kinds of services that a FinTech company provides-
• Payment service- The Reserve Bank of India (RBI) has launched a ‘Differentiated banking license’ scheme to issue ‘on-tap’ licenses to that FinTech that provides banking and other financial services to individuals or businesses. The applicant for this license must register themselves and comply with outlined regulations.
• Peer to Peer Lending- This license can only be obtained if the applicant acts as an intermediary.
• Retail Service providers- It is the License to carry out lending and depositing services for all the micro, small or medium industries.
• Financial Management/Investment- There are no such regulations but the only requirement for an applicant is to get registered as Non- Banking Financial Companies (NBFCs).
Register Domain– Having a domain name and a fully developed website is essential for any business. Especially, a Tech company’s fundamental requirement is to have a web presence. FinTech start-ups also set up mobile apps to increase their users or subscribers. For this, the domain name is very important. It defines the company’s groundwork for online finances. So, the last step for registration is to get the domain name registered.
Conclusion
The FinTech companies in India are growing rapidly, and it is expected to reach phenomenal growth in the upcoming years. Start-ups like these specializing in digital payments, lending, and the wealth sector are blessed with the Indian government’s support and it is favourable to set-up the Fintech company in India.
Authored By: Adv. Anant Sharma & Anjali Swami
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