Compliance requirements for foreign subsidiary companies in India are governed by the Companies Act, 2013, and the rules and regulations issued by the Ministry of Corporate Affairs (MCA). All foreign Companies or Firms located in India are required to act under the Companies Act, 2013, and must strictly adhere to the compliances stated by the regulatory body. As per the law, all foreign companies or firms that operate within the Indian land need to follow periodic compliances, annual compliances, and event-based compliances. The compliances are also dependent upon the type of company and its nature of business, the type of industry it belongs to, the size of the market it covers, the number of employees, and annual sales turnover. Noncompliance with legal procedure and nonpayment of returns also attracts heavy penalties and other legal action toward the company or firm operating on Indian land.

Compliances for Wholly-Owned Subsidiary of Foreign Company under Companies Act, 2013

Under the Companies Act, 2013, a foreign subsidiary company operating in India is subject to certain compliance requirements. Here are some essential compliance obligations that foreign subsidiaries need to fulfill:

Incorporation: A foreign subsidiary company must be incorporated as a private limited company or a public limited company under the provisions of the Companies Act, 2013.
Registered Office: The foreign subsidiary must maintain a registered office in India, which should be a valid address for official communications.
Directors and Shareholders: The Company must appoint at least two directors, with at least one director being an Indian resident. Additionally, the subsidiary must have at least one shareholder, and foreign companies can hold shares in the Indian subsidiary.
Financial Statements: The subsidiary must prepare and file financial statements, including balance sheets, profit and loss statements, and cash flow statements, in accordance with Indian accounting standards. These statements should be audited by a qualified auditor.
Annual General Meeting (AGM): The foreign subsidiary must hold an AGM within six months from the end of the financial year. The AGM should be held in India, and all necessary resolutions and reports should be prepared and filed as per the Companies Act.
Compliance with Indian Laws: The foreign subsidiary must comply with all relevant Indian laws and regulations, including tax laws, labor laws, and corporate governance requirements. The subsidiary company is subject to income tax regulations in India. It must obtain a Permanent Account Number (PAN) and file annual tax returns with the Income Tax Department. Compliance with withholding tax provisions and transfer pricing regulations may also be applicable.
Statutory Registers and Records: The subsidiary should maintain statutory registers, such as the Register of Members, Register of Directors, and Register of Charges, at its registered office in India. These registers should be updated regularly and made available for inspection as required by law.
Annual Return: The foreign subsidiary needs to prepare and file an annual return with the Registrar of Companies (RoC) within 60 days of the AGM. The annual return provides details about the company's activities, shareholding structure, and financial information.
Compliance with Transfer Pricing Regulations: If the foreign subsidiary engages in transactions with its parent company or other related entities, it may be required to comply with transfer pricing regulations to ensure that the transactions are conducted at arm's length prices.
Compliance with FEMA Regulations: The foreign subsidiary must comply with the Foreign Exchange Management Act (FEMA) regulations, particularly in relation to foreign investment, repatriation of funds, and foreign exchange transactions.
Filing Requirements: The subsidiary company must file various forms, returns, and documents with the ROC within prescribed timelines. This includes annual filings, event-based filings (such as change in directors, share capital, etc.), and other regulatory compliances.
Compliance with Foreign Exchange Regulations: The subsidiary company must comply with the foreign exchange regulations, including reporting requirements for foreign investment, repatriation of profits, compliance with foreign direct investment (FDI) policies, etc.

Therefore, to avoid untimely payment and compliance with statutory laws, hiring a law firm is necessary. It's important to note that compliance requirements may vary based on the specific circumstances of the foreign subsidiary and any applicable industry-specific regulations. It is advisable to consult with a legal or compliance professional familiar with Indian corporate laws to ensure full compliance with all relevant obligations.

How Global Jurix Law Firm Help for Foreign Subsidiary Company Compliances ?

The India-based Wholly-owned Subsidiaries and other entities of Foreign Companies, may avail our expert and punctilious services for their mandatory compliances, just through calling over: +91-81303-00046; or sending relevant queries or requests at: companies@GlobalJurix.com

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