Incorporating a company in India by a foreign company is regulated by the Companies (Registration of Foreign Companies) Rules, 2014 which provides guidelines relating to foreign company registration in India.

In our previous articles, we have discussed the compliances for wholly-owned subsidiary and other provisions.

In this article, we will elaborate further on the other important compliances and requirements for such companies.

Types of compliances for subsidiary company

Following are the other types of compliances for the subsidiary company in India

Particulars related to directors and Secretary:

A foreign company is required to furnish all the particulars or details related to the directors and secretary to the Registrar of Companies (ROC). The following points must be kept in mind while fulfilling this compliance for foreign company-

1. Within thirty days of registration or incorporation of the business and its place of business in Indian Territory, a foreign company must provide all the information as specified in Section 380(1) of the Companies Act, 2013 along with the list and particulars related to all the directors and secretary in the company to the Registrar of Companies (ROC).
2. The list regarding the directors and secretary must contain all the prescribed details for each and every person included in the given list.
3. Every foreign company must file Form FC-1 with the registrar within thirty days of registering its place of business. Such form is to be filed along with the prescribed fees as per the Companies (Registration Offices and Fees) Rules, 2014. Also, the company is required to provide the documents for company registration as per the Section 380(1) of the Companies Act, 2013 that must be supported by attested approval copy from the Reserve Bank of India under the Foreign Exchange Management Act (FEMA) and other regulatory bodies for approving the place of business of the company. If an authorized representative of the foreign company provides with a declaration then in that case no approval is required.
4. In case any alterations are to be made in the documents submitted to the Registrar of Company (ROC), the foreign company must file Form FC-2 under Section 380(1) of the Act along with the prescribed fees in the Companies (Registration Offices and Fees) Rules, 2014. The form is to be filed for providing all details and particulars related to the alteration. Foreign company must comply with above within thirty days from the date of making such alterations or its occurrence.

Financial Statements of the foreign company:

As part of the compliance for foreign company, it must prepare financial statements regarding the business operations as per the Schedule III of the Act for each financial year.

1. The following must be included in the financial statements of the company for complete compliance for foreign company:

1. All the documents that must be attached as per the provisions of Chapter IX of the Companies (Accounts) Rules.
2. The parent or holding company must submit the latest copies of the consolidated financial statements to the concerned authority or bodies in the host country as per the provisions and regulations formulated there. In case the documents are not in English language then the company must submit a certified translated copy of the documents in English.
3. Such translated certified copy is to be provided as per the Section 380(2) of the Companies Act, 2013.

2. As part of the compliance for foreign company, it shall file the following documents attached with the financial statements-

1. Repatriation statements of the profits.
2. Related party transaction statements.
3. Fund transfer statements related to any transfer made between the foreign company and other related party outside India.

3. All the above mentioned documents and other related ones must be submitted to the ROC within six months from the last date of the previous financial year. The period to submit such documents can be extended to up to three months and not more than that by the ROC for any special reasons described in application made by the foreign company in written format.

Audit of accounts of the foreign company:

Post registering foreign company registration in India, they are required to get their accounts audited at regular intervals. Under Section 381(1) and Rule 4 of the Companies Act, every foreign company incorporated in India are required to get its accounts audited by a practicing Chartered Accountant in India or a firm of Chartered Accountants.

Place of business of foreign company:

Every foreign company shall file details in form FC3 regarding all the place of business of the company in India and the locations till the date up to which the balance sheet has been prepared. It is an important compliance for foreign company and must be fulfilled for avoiding any penalty.

Annual Return Filing:

In Form FC-4 the annual returns must be filed by the foreign company with the registrar. This must be filed within sixty days from the end of the financial year. The prescribed fees are to be given along with the form to complete this compliance for foreign company.

Documents in prospectus of foreign company:

The following documents must be annexed or attached to the prospectus of the company-

1. Consent from an expert for issue of the prospectus.
2. Copy of the underwriting agreement.
3. Copy of the appointment contracts of the managing director and managers in the company. In case a written contract is not provided then the compliance for foreign company is to be completed by giving full details and particulars in a memorandum.
4. If the prospectus is signed by an authorized agent of directors then a copy of power of attorney is to be submitted.
5. Copy of material contracts that has been entered within the last two preceding years but not in the ordinary course of the business operation.