Mandatory Compliances under Companies Act, 2013 With the rise in number of young entrepreneurs...
The development in India is catching speed like a bat out of hell. It has become the fastest growing economies in the world with an abundant business opportunity for NRIs, Foreign Nationals and Foreign Companies. There are ample numbers of ways where foreign investment can be flow in India and one of the most preferable and easy ways is incorporating a Wholly Owned Subsidiary Company.
A wholly owned subsidiary company is a company whose 100% stocks are held by the other company Known as the parent company. Talking about the wholly owned subsidiary company in relation to Foreign Company and Indian Company following definitions came into the light-
According to Section 2(42) of the Companies Act, 2013 a foreign company is a company or body corporate incorporated outside India which –
is called a Foreign Company. For example- X PVT LTD is incorporated in London.
When any company incorporated outside India makes 100% FDI (Foreign Direct Investment) in India, the Indian company incorporated for this purpose is termed as the Wholly Owned Subsidiary Company. Read more on Wholly Owned Subsidiary Company.
Let us understand this with an example-
ABC private ltd company is a foreign company incorporated outside India making a 100% FDI in DEF Pvt Ltd Company incorporated in India by the same foreign parent company for the business purpose. Hence, DEF Pvt Ltd will be said to be a wholly owned subsidiary company.
A foreign company deciding to commence business in India can do in following ways-
Incorporating a wholly owned subsidiary company is not a very difficult task but not that easy too. We at Enterslice will help you to get your wholly owned subsidiary company in a pocket-friendly cost.
If we sneak into the dictionary, we can find the word “Compliance” which means that an individual or a group conforms with or obeys a set of rules or regulations determined by the law or any governing body.
Now, when it comes to a business and corporate management, compliances known as the legal laws and regulations that are implemented on the company or how it works, or how their staff members works or what is their treatment method towards their customers.
Furthermore, compliance helps you in avoidance of any penal charges, building Positive Reputation, higher productivity in the company. Hence, the following are the compliances that every wholly owned subsidiary company needs to follow-
After a wholly owned subsidiary company formation in India, it is required to open a bank account for the purpose of receiving the subscription money from the foreign subscribers.
The next step is to receive the subscription money after bank account opening. The amount towards subscription money shall be received in that bank account.
In a wholly owned subsidiary company, the process of share allotment is done in board meeting after receiving the subscription money from the subscribers.
After wholly owned subsidiary company incorporation the next step is to appoint the first auditor within the period of 30 days from the date company registration in India and filing of the necessary forms with the registrar of the company.
After a wholly owned subsidiary company registration in India, the directors will give the disclosure of interest in the first board meeting along with the declaration regarding disqualification after company registration.
From the date of wholly owned subsidiary company registration in India within the period of the next two months, share certificates will be delivered by the company to the subscribers of the memorandum. Business shall not be commenced by the Indian subsidiary company unless the value of the shares has been paid by each subscriber which was agreed to be taken by the subscribers at the time of subscribing to the Memorandum of Association.
Stamp duty is required to be paid with the revenue department within the period of 30 days from the date of issuance of share certificates. The amount of stamp duty is determined on the face value of paid-up share capital including the amount of security premium.
There is a requirement of holding at least 4 board meetings within a one financial year and the other provisions are that maximum gap shall not be more than 120 days between 2 board meetings.
It is required to hold first Annual general meeting within the period of 9 months from the date of closure of first financial year and the subsequent AGMs shall take place within the period of 6 months from the date of closure of subsequent financial year AGM of the company is conducted to approve the annual accounts of the company and for any other agenda.
The wholly owned subsidiary company in India is required to file its financial statements within the period of 30 days from the date of AGM in the prescribed form AOC-4 and annual return within the period of 60 days from the date of AGM in the prescribed form MGT-7 with the registrar of the company.
It is required for Indian Subsidiary Company to intimate RBI through AD bank in ARF form within the period of 30 days from the date shares subscription money have been received from subscribers.
It is also required for Indian Subsidiary Company to intimate about the share allotment to the RBI by filing of online Form FCGPR through AD bank within the prescribed period of 30 days from the date of shares allotment to the subscribers.
Every wholly owned subsidiary company in India, which receives FDI in any of the previous years, is required to file an FLA return on or before the 15th day of July every year for disclosing the foreign assets and liabilities.
In case of share transfer from resident to non-resident or vice-versa, it is required to file Form FCTRS with the RBI through AD bank within the prescribed period of 60 days from the date of receipt of the amount of consideration.
IEC (Import Export Code) is required to be obtained by the wholly owned subsidiary company in India if the business of the company is involved in the business of import/ export of goods and services.
The intimation is required to be given by the company about the changes in the details which have been initially given at the time of IEC registration to the department.
It is required for Wholly Owned Subsidiary Company in India to register under Goods & Services Act. GSTIN will be issued by the government which will be used for the future correspondences of the business.
It is required for every company to file the periodical (monthly & annually) returns on the prescribed due dates as prescribed by the government for providing details regarding sale and purchase of goods & services and also for the purpose of claiming the input tax credit.
A Wholly Owned Subsidiary Company is a foreign entity that is registered, incorporated or formed according to the laws and regulations of the host country in which the Indian Party makes a direct investment.
The Indian party should approach an authorized Dealer Category – I bank with an application in Form ODI with the prescribed enclosures and documents for affecting the remittances towards such investments.
Automatic Route- no prior Registration with the Reserve Bank is necessary for making a direct investment under the automatic route to the WOS by the Indian Company or Foreign Company.
Approval Route- under this route, any person who invests in the company has to take prior approval from the RBI following prescribed guidelines.
Yes, the Indian Party is permitted to issue performance guarantee and 50% of the amount of the performance guarantees will be contributed to financial commitments which should be within the limit prescribed by the Reserve Bank.
Enterslice is a business platform in India which has the largest number of satisfied customers in India offering a variety of service like Foreign Subsidiary Company Compliance, Wholly Owned Subsidiary, and Foreign Subsidiary Incorporation etc.
Get free consultations for foreign Subsidiary compliance maintenance through Enterslice by contacting us and we will get back to you with the professional backed team.
Our experts at enterslice are here to ensure smooth implementation of your work and assistance in international registration as well as compliances. We follow these simple steps for effective execution of your order with us;
Based on your inquiry our relationship executives will get in touch with you and discuss and understand your requirement. Based on your requirement we will recommend you the service package provided by us. We will look for the best possible solutions for your questions and assist you in the best possible ways. Based on the discussion we will generate your order.
Once the order is created you will be required to make the payment along will all the necessary documentation. The payment amount will include our services fees as well as the relevant government fees. And the list of all the required documents will be provided to you by our executives. You can make the payment through any of the following modes;
Once the payment is done all the documents will be reviewed by our service executives and work will be initiated from our end. You will be kept in the loop in every step of the work and updated on every action. Once the order is completed and we will register your wholly owned subsidiary company.
As the registration is completed, you are ready to venture the new market and start the business.