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Annual compliance to be done by foreign company

Praveen Singh 
on 02 September 2020

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There are various compliances that 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) of the Comapnies Act.

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 above, a key thing which needs to be understood is that a Foreign Company can start its business operations through the following strategies:

-Foreign Company can start its business operation through a wholly owned subsidiary Company in sectors where government has allowed 100% FDI.

-Foreign Company can start its business operation through entering into a Joint Venture with Indian person having expertise as required in sectors where government do not allow 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.

Annual compliance to be done by foreign company

Let's go through the sections one by one to understand the compliances needs to be known well in advance:

SECTION 380: Documents to be filed with ROC by foreign Companies?

It is pertinent to mention here that once the foreign company establishes its 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(Along with 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 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 addressed must be written.

ANNUAL FILING:

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
  • FEMA Law
  • Goods and Service Tax
  • Employees Provident Fund
  • Employees State Insurance etc.
  • Other specific

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