Compliances For A Foreign Subsidiary Company In India

When any type of company is established in India, it is governed by law to follow the regulations and rules according to the government. In essence, this applies to all companies whether they’re foreign or local. However, the main difference is simply that foreign entities have more regulations and rules when compared to Indian owned companies.

Read on as we dive into a foreign subsidiary company in India.

If you didn’t already know, foreign subsidiary companies are those where more than 50% of the equity shares are owned by a foreign entity. This, therefore, leaves the foreign company in the position of being the parent company. However, in order for a company to be a foreign subsidiary company, the company must first be incorporated in India.

In the case of compliances, these are dependent on several aspects of a company. Hence, all parties involved should be aware of and properly understand the different compliances that should be met. Some of these include the number of employees, the operations, the industry, and even the annual turnover. Foreign companies are defined according to the Companies Act of 2013 under section 2(42) and must follow rules and regulations.

Foreign Subsidiary Company In India

The following are some of the more important compliances that should be met by foreign companies in India according to the Companies Act section 380 and 381:
* Financial Statements – All financial statements should be submitted within six months after the financial year has ended.
* Accounts Audit – All subsidiary companies should have their accounts audited by a registered Chartered Accountant. Hence the accounts should be arranged and available for the audit.
* Translation And Authentication Of Documents- All documents submitted by the subsidiary should be validated by an Indian lawyer. However, all supporting documents should be accurately translated into English before they are submitted to the ROC.

As we conclude, we have just looked at a foreign subsidiary company in India. We have also looked at various compliances that should be met for all foreign companies in India. Any company can easily become a subsidiary if desired. However, they need to follow the proper regulations and guidelines in order to be properly established according to the law and all supporting documents should be validated by the relevant legal entity.