Post Incorporation Compliances for Wholly Owned Subsidiary

Post registration of wholly owned subsidiary in India by foreign company, following compliances are required under different statues:

Compliances under Companies Act, 2013

  1. Opening of bank account- After formation of wholly owned subsidiary in India, Bank account will be opened to receive the subscription money from the foreign subscribers.
  2. Receiving of subscription money- After opening the bank account the subscription money will be received in the bank account.
  3. Allotment of shares- After receiving the subscription money from the subscribers, allotment of shares of wholly owned subsidiary company will be done in the board meeting.
  4. Appointment of First Auditor

After opening an Indian subsidiary, first auditors of the company need to be appointed within 30 days from the date of company registration in India.

  1. Disclosure of Director’s Interest and Declaration Regarding Disqualification. – Disclosure of interest given by directors will be noted in the first board meeting after registration of wholly owned subsidiary in India by foreign company.
  2. Issue of Share Certificates to Subscribers.

Within a period of two months from the date of registration of wholly owned subsidiary company in India, every company must deliver the share certificates to the subscribers of the memorandum.

Indian Subsidiary Company shall not commence its business, unless each subscriber has paid the value of the shares agreed to be taken by him at the time of subscribing to the Memorandum of Association.

  1. Payment of Stamp duty on allotment of shares certificate with the revenue department is required to pay within 30 days from date of issuance of share certificates. The stamp duty is required to pat at rate of 0.1% on face value of paid up share capital including the security premium amount.
  2. Corporate Stationary is required to be printed
  • Company seal
  • Letterheads
  • Share Certificates
  • Statutory Registers as per Companies Act, 2013
  • Printing of MOA & AOA
  1. Board Meetings: Minimum 4 board meetings are required to be held within a financial year and the maximum gap between 2 board meetings shall not be more than 120 days.
  2. Annual General Meeting: First annual general meeting of shareholders shall be conducting to approve the annual accounts of the company and for any other agenda. First AGM is required to be held within 9 months from the date of closure of financial year and subsequent AGMs will required to be held within 6 months from the date of closure of financial year.
  3. Filing of financial statement and annual return– Indian Wholly owned subsidiary company is required to file its financial statements within 30 days from date of AGM and its annual return within 60 days from date of AGM with ROC.

Compliances under FEMA

  1. Intimation of Advance Remittance- Within 30 days from date of receiving the shares subscription money from subscribers, the Indian Subsidiary company is required to intimate with RBI through AD bank in ARF form.
  2. Intimation of allotment of shares- Within 30 days from date of allotment of shares to subscribers the Indian Subsidiary company is required to intimate about the same with RBI by online filing of form FCGPR through AD bank.
  3. FLA return- Every wholly owned subsidiary company in India, which receives FDI in any of the previous year is required to file a FLA return on or before 15th day of July every year for disclosing the foreign assets and liabilities.
  4. FCTRS form-Form FCTRS is required to be filed online with the RBI through AD bank within 60 days from date of receipt of amount of consideration in case of transfer of shares from resident to non-resident or vice-versa.

Compliances with DGFT (Director General of Foreign Trade)

  1. Obtaining Import Export Code (IEC)- WOS set up in India is required to obtain IEC if the business of the company is to import/ export of goods and services.
  2. Modification of IEC details- The company is required to intimate about the changes in the details given initially at time of applying IEC to the department for modification in the IEC.

Compliances under GST Act

  1. GST registration- Subsidiary company in India is required to register under GST Act. i.e Goods & Services Act. The government will issue a GSTIN to be used for the future correspondences of the business of the company.
  2. Filing of returns- The Company is required to file the periodical (monthly & annually) returns as prescribed by the government on the prescribed due dates to provide detail regarding sale and purchase of goods & services and for claiming the input credit also.
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Author: Anil Agrawal
EZYBIZ India Consulting LLP, New Delhi. The firm is business and tax consultancy firm providing consultancy in Taxation, Regulatory, Transfer pricing, Valuation, Corporate funding and Business set up matters. He may be reached at 9899217778 or anil@ezybizindia.in.

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