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AK (MD)     17 September 2010

Need info on Limitation on business of Proprietorship firms


I am running a company/firm under sole proprietorship. My business verticle is in Aviation & Hospitality Traning and consulting.

Now, as per my interest, I am willing to establish my company operations in Gulf countires. By launching Aviation Training academy with support of local partners. My first venture will be in Saudi Arabia, for which I have found a parnter company there, who will make 100% investment in setting up training academy.

However as per my condition, the entire operations and major controll of the company will be with the indian company, thats my firm. In return we offer them maximum profit share of that business and some percentage we will be taking.They will be even using our company name for business in Saudi with our permission. Our new venture will duely beregistered in Saudi as per their law.

What I need to know is:

Can a sole proprietorship company may engage in a business estabslihed outside India under the same firm name ? This is without making any investment outside. Is there any formalities for this ??

What kind of taxes will be applicable if I bring my profit percentage from saudi business ? Is there any easy way to save on taxes ?

To be on a safer side, should I make that project registered in Saudi as a Joint Venture, or make them our Franshisee, LLC or ......?? Please advice

Also, dealing with clients in India & abroad, lot of time wea re asked to proove our company registration, which is hard to furnish being a proprietorship firm. Apart from sales tax registration, is there anyw ay we could register some where in govt bodies to get a certificate ?? Or can we make a affidivit of being proprietor or for company ?

I will highly appreciate if the experts and give a detail comment on this.


 6 Replies

adv. rajeev ( rajoo ) (practicing advocate)     17 September 2010

Better cosnult Chartered accountant to know more about.

AK (MD)     17 September 2010

Hello Experts,

I need a detail advice and suggestion to my query listed above.

Please go through my msg above and let me know all your suggestions, advice and informations.

Thanks in advance to all.



Rashmita Saikia (Lawyer)     21 September 2010



Kindly contact personally Novojuris Services India Private Limited. They are expart in these fields. I think they will

chage a vey minimal amount fo these.

Ph: 080 25551639

Mobile: 9008667286

email id :







Shihab,Corporate Lawyer (LL.B M.B.A Corporate Lawyer and Management Consultant)     27 September 2010


1.A sole proprietoryship concern would have disadvantages like, a) No seperate lagal entity b) a non-corporate system,so if you want to grow ,should spin off to a corporate entity.Why cant you convert the existing concern to a Private Limited company?

2.If you got NRI status ,you will get advantage.

3.For Franchising you should have Quality management system; both in document and practice.Think about joint venture.


AK (MD)     28 September 2010

Hello Shihab,

Thanks for the responce.

You are correct on many part, however we also need to see the definition & policies, rules for Joint Venture, Franchising etc in other countires. As we are seeking oppurtunitites in Gulf countries.

Every one is suggesting diferent, although we need to see the benifits and losses, rules regulations, taxations etc of both countries.

Really confused ..!!


SACHIN AGARWAL (ADVOCATE)     10 December 2010

The advice of Mr. Shihab is good.


Altough a proprietorship concern can start and carryon any business in India or outside the country but it is always better to have a corporate entity. The proprietorship concern has no separrate legal entity.

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