ANNUAL COMPLIANCE REQUIREMENT BY FOREIGN COMPANY
There are various compliances needs to be done by a Foreign Company, however before going into details one needs to understand the term Foreign Company. The word “Foreign Company” has been defined under Section 2 (42) “Foreign Company”.
It includes a company or a Body corporate which is formed outside the territory of India and having its place of business in India through its authorised representative without which it cannot carries out any business activity in India. Further, a Foreign Company can start its business through 3 modes which are as follows:
- Liaison/Representative Office
- Project Office
- Branch Office.
Apart from the above, a key thing which needs to be understood that a Foreign Company can start its business operations through following strategies:
Foreign companies can start its business operation through a wholly-owned subsidiary Company in sectors where the government allowed 100% FDI.
A Foreign Company can start its business operation through entering into a Joint Venture with Indian person having expertise as required in sectors where the government do not allowed 100% FDI. The provisions with regard to Foreign Company are contained in Section 380 to Section 386, Section 392 and Section 393 of the Companies Act, 2013 and also in Companies (Registration of Foreign Companies) Rules, 2014.
Let’s go through the sections one by one to understand the compliances needs to be known well in advance:
SECTION 380: WHAT ARE THE DOCUMENTS NEEDS TO BE FILED WITH THE REGISTRAR OF COMPANIES BY FOREIGN COMPANIES:
It is pertinent to mention here that once the foreign company established in business in India it shall first within a period of 30 days shall file particular of place of business to RoC alongwith following details and/or documents:
- Copy of Memorandum of Association and Articles of Association of the company, the documents shall be in English language.
- Full address of the registered office of the Company
- Details of directors and Company Secretary of the Company
- Name and other details of authorised representative of the Foreign Company appointed by the Foreign Company who must be an Indian
- Timing of office i.e., opening, closing and holidays
- Declaration on the fact that the director of the company or authorised representative were never convicted or debarred
Rules 3(3) of the Companies (Registration of Foreign Companies) Rules, 2014, provides that the Foreign Company is required to file Form FC-1(Alongwith an approval from the RBI) or declaration that no such approval is required to be submitted.
Rules 3(4) of the Companies (Registration of Foreign Companies) Rules, 2014 provides that an alteration can be done in the documents submitted in Form FC-2 within a period of 30 days.
Section 381: Accounts needs to be prepared by Foreign Companies
Rules 4, 5 and 6 provides as follows:
Every Foreign Company is required to be prepared the financial statements in accordance with Indian Law and shall file it within a period of 6 months from the end of every financial year. The documents must be in English language. The accounts to be audited by a Practicing CA firm. Further the Foreign Company is required to file the financial statement with list of places of its business only in Form FC-3. The same is to be filed alongwith the statutory fees.
Section 382: Displaying of the full Name and other details of Foreign Companies:
It is mandatory for the Foreign Company to display its name and other details as provided under the Act exhibit outside its office, on its business communication. Letter of the name must be legible
Section 383: Service on Foreign Company:
Any notice or document if served to the Foreign Company it must be clearly address and name of the person to which it is address must be written.
ANNUAL FILING BY FOREIGN COMPANY:
The annual return is to be filed by the Foreign Company in Form FC-4 within 60 days from end day of financial year to RoC.
Other Compliances in law to be complied with:
Income tax Laws
Goods and Service Tax
Employees Provident Fund
Employees State Insurance etc.