Know all about Foreign Company Compliances in India

Last Updated On: April 19, 2021, 8:19 p.m.
...

KNOW ALL ABOUT FOREIGN COMPANY COMPLIANCES IN INDIA

Foreign companies registered in India are required to maintain various additional compliances under the Companies Act, 2013. In this article, we look at some of the unique compliance requirements for a foreign company registered in India. 

 

Form FC-1

Foreign companies registered in India are required to file Form FC-1 within a period of thirty days of the establishment of its place of business in India. The application must be supported with an attested copy of approval from the Reserve Bank of India under the terms of Foreign Exchange Management Act or Regulations, and too from other regulators, if any, sanction is necessary.

 

Financial Statements:

All foreign companies registered in India are required to organize financial statement of its Indian business operations in agreement with Schedule III of the Companies Act, 2013. Thus foreign companies are required to furnish the following information / statements together with the financial statements of the company to be filed with the Registrar of Companies:

  • Statement of associated party transaction,
  • Statement of repatriation of profits
  • Statement of transfer of funds (including dividends if any) which shall, in relation of any fund transfer between place of business of foreign company in India and any other related party of the foreign company
  • The documents that are referred to above in this rule must be delivered to the Registrar of Companies within a period of six months from the end of the financial year of the foreign company.

 

Audit of Accounts of Foreign Company:

All foreign companies must get its accounts, pertaining to the Indian business operations organized in agreement with the necessities of clause (a) of sub-section (1) of section 381 and rule 4 and audited by a practicing Chartered Accountant in India or a firm or LLP of practicing Chartered Accountants.

 

Authentication of Translated Documents:

Documents necessary to be filed with the Registrar of Companies by the foreign company must be in English language. If any translation is made out of India, it must be authenticated by the signature and the seal of the official with custody of the original or a Notary of the country where the company has been incorporated. Where such translation is made in India, it shall be authenticated by an Advocate, attorney or pleader entitled to appear facing any High Court and an affidavit, of a competent person having, in the estimation of the Registrar.

 

Annual Accounts and List of Places of Businesses in India (E-FORM FC-3):

Every foreign company is required to prepare and file financial statements within a period of six months of the close of the financial year of the foreign company to which the financial statements relates with the Registrar of companies in E-Form FC-3. It shall also prepare and file a list of places of business in India established by a foreign company as on date of the balance sheet in the same form.

However, the Registrar can extend the said period to not more than three months on application made in writing.

Every foreign company shall prepare financial statement of its Indian business operations in accordance with Schedule III of Companies Act, 2013 for each financial year. Every foreign company shall, along with the financial statement required to be filed with the Registrar, annex or attach thereto the following documents:

1. Statement of Related party transaction, which shall include:

Names of the person in India which shall be deemed to be the related party of the foreign company or of any subsidiary or holding company of such foreign company or of any firm in which such foreign company or its subsidiary or holding company is a partner;

  • Nature of such relationship;
  • Description and nature of transaction;
  • Amount of such transaction during the year with opening ,closing, highest and lowest balance during the year and provisions made (if any) in respect of such transactions;
  • Reason of such transaction;
  • Material effect of such transaction on both the parties;
  • Amount written off or written back in respect of dues from or to the related parties;
  • A declaration that such transactions were carried out at arm's length basis;
  • Any other details of the transaction necessary to understand the financial impact.

2. Statement of Repatriation of profits, which shall include:

  • Amount of profits repatriated during the year;
  • Recipients of the repatriation;
  • Form of repatriation;
  • Dates of repatriation;
  • Details if repatriation made to a jurisdiction other than the residence of the beneficiary;
  • Mode of repatriation; and
  • Approval of Reserve Bank of India or any other authority, if any.

 

3. Statement of transfer of funds (including dividends if any) which shall, in relation of any fund transfer between place of business of foreign company in India and any other related party of the foreign company outside India including its holding, subsidiary and associate company, include:

  • Date of such transfer;
  • Amount of fund transferred or received;
  • Mode of receipt or transfer of fund;
  • Purpose of such receipt or transfer; and
  • Approval of Reserve Bank of India or any other authority, if any.
ABOUT LEGAL SUVIDHA

Copyright © 2019 - All Right Reserved