Compliances that a foreign company needs to follow

A foreign company that has been incorporated in India with the due process must adhere to certain compliance that is extremely important. There are several compliances that a foreign company needs to follow in today’s market. The new Companies Act 2013 has various new provisions that have made the compliances mandatory and much more strictly stipulated than before. The wider scope and strict compliances that have been ensured by the new Act are quite significant with regard to the operations of foreign companies in India.

Compliances By The Companies Rules, 2014 & Companies Act, 2013

• Reporting the establishment of business through E-FORM FC-1 within 30 days of the establishment of the business is necessary. This form has to be submitted to the ROC along with all the documents as mandated by provisions of sub-section (1) of section 380. A copy of approval from RBI, attested under the FEMA Act and other rules have to be submitted as well.
• Any changes in the information (documents, director, and subscriber’s details, etc.) provided to the registrar, can be done through E-Form FC-2 under sub-section (1) of section 380 within a 30-day period.
• Financial statements and a list of places of business in India have to be prepared through E-Form FC-3 and filed to the ROC within 6 months of the end of a financial year.
• Each foreign company must get its accounts audited by an auditor in India under the provisions of clause (a) of sub-section (1) of section 381 and rule 4. Audit of accounts has to be in compliance with the provisions of chapter X (audit and auditors). The audit can be conducted by either a firm or even a limited liability partnership of practicing chartered accountants in India.
• Annual returns have to be filed by the foreign company each fiscal year through E-Form FC-4, (within 60 days of the end of a financial year)

Every foreign company must prepare its financial statements regarding all business operations in India as provisioned by Schedule III of Companies Act, 2013. Along with the financial statements, the following documents must be attached and sent to the registrar as well:

Statement of Related Party Transactions

This statement must carry names of the people in India who are related to the foreign company, the nature of their relationship, and their role. The statement must also include descriptive details of the transactions, reason, result on the affected parties, the balances, provisions, and other monetary actions that took place within a financial year.

Statement of Repatriation of Profits

The statement must include the amount of profit repatriated to the home country, recipient info, and dates of the repatriation along with the mode at which the repatriation took place all approved by the Reserve Bank of India.

Statement of Transfer of Funds

It must consist of the date amounts, purpose, and receipts of the relevant transfer of funds along with the approval of the Reserve Bank of India. It must include dividends as well (if any exist).

A foreign company should always follow the aforementioned compliances strictly after their business incorporation and must take special care in the filing of all the relevant and necessary documents.