Wholly own subsidiary compliance in India | FEMA | ROC
Any foreign company can start its business in india either by incorporating its subsidiary or opening branch, liaison or project office. In India a company has to undergo several compliances under foreign exchange and management act (FEMA), Companies act, 2013 as well as few RBI guidelines irrespective of its size or business operations. Below mentioned are the few compliances required to be mandatory followed by any foreign company:-
Post one time compliance
Advance Reporting Form (ARF): An Indian company receiving investment from outside India for issue of shares or other eligible securities under the FDI Scheme has to report the details of the amount of consideration to the Regional Office concerned of the Reserve Bank through its AD Category I bank within 30 days from the receipt of funds.
Form FC-GPR: When the company receives the foreign investment and against such investment the company allots shares to such foreign investor then it is the duty of the company to file details of such allotment of shares with the RBI within 30 days and for that company has to use the form FC-GPR.
FLA Return- It should be filed by every Indian Company receiving FDI or making ODI on or before 15th July every year. A Single Master Form- Under the head Single Master form FC-GPR, FC-TRS,LLP-I, LLP-II, CN, ESOP, DI, DRR, InVi are to be filed and submitted.
Procedures for compliances
These procedures for whole compliances has been divided into 3 steps which are as follows:
Step 1: Obtaining FIRC and KYC report:
Receipt of foreign currency in company bank account (In USD) from overseas investor.
Upon receipt of amount, Bank would ask for purpose of Remittance, Kindly inform the purpose to bank ‘TOWARD SHARE CAPITAL.’
Banks will Issue FIRC, Check the purpose and amount on the FIRC.
Request the investors to obtain KYC from their bankers in the attached format and send it to Indian Bank.
Based on this overseas bank KYC, the Company’s bank will issue KYC for the overseas investor.
Step 2: Filing advance reporting form and KYC form
Within 30 days from the receipt of Inward remittance, The Company has to inform RBI through Company’s Bank (AD Category I Bank) by submitting Annex 6 along with copy of KYC & FIRC / Debit Certificate.
The Company’s banker (AD Category I bank) will certify Annex 6 after due verification and forward it to RBI.
Upon receipt of intimation in Annex 6, RBI will allot and communicate the Unique Identification Number (UIN) for each such inward remittance or FCNR / NRE / NRO account debit.
Step 3: Filing form FC GPR
Within 180 days from the receipt of the money from overseas the Company has to allot shares to the overseas investors.
If any excess fund remains after allotment, the unallotted sum should be remitted back to the overseas investor within 180 days from the date of receipt.
Prepare Form FC-GPR.
Get a SEBI registered Merchant Banker / Chartered Accountant certificate for the share valuation (indicating the manner of arriving at the price of the shares issued to the persons resident outside India).
Get a Company Secretary certificate for the compliance in the format specified in the Form FC-GPR
File Form FC-GPR with RBI through Company’s Bank (AD Category I Bank) within 30 days from the date of allotment.
Attachments required to file with Form FC-GPR:
- SEBI registered Merchant Banker / Chartered Accountant certificate.
- Company Secretary certificate
- UIN copy of all inward remittances for which shares are allotted. If UIN is applied for and yet to be received from RBI, attach copy of the UIN application filed with RBI through AD Category I bank
- Copy of FIRC’s received for all inward remittances for which shares are allotted.
- Copy of PAS-3 filed with ROC as a proof of allotment.
- The Company’s banker (AD Category I bank) will certify Form FC-GPR after due verification and forward it to RBI.
- RBI after due verification of FC-GPR will allot a FC-GPR registration number and communicate to the Company.
- This FC-GPR registration number is final approval of RBI for the Foreign investment. For any future repatriation of share sale proceeds, the FC-GPR registration number to be quoted.
One time compliances
Form FC-1- Within 30 days from the establishment of principal place of business in India, foreign company is required to file Form FC-1.
Auditor Appointment- Auditor is required to be appointed by Board of Director of company within 30 days from the date of incorporation of company.
Form FC-4- Every foreign company shall prepare and file annual return of the company in eForm FC-4 within 60 days from the close of financial year.
Form FC-3- This form is required to be filed within 6 months of the closure of financial year of the foreign company.
DIR-3 KYC- Every director is required to file Dir-3KYC who is having din as on 31st march of financial year, on or before 31th September of immediate next financial year.
AOC-4- Every company is required to file AOC-4 within 30 days from the date of Annual general meeting.
MGT-7- Every company is required to file MGT-7 within 60 days from the date of Annual general Meeting.