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In the dynamic landscape of global business, India has emerged as a beacon for foreign investment, propelled by its status as one of the world’s fastest-developing nations. This comprehensive guide unravels the intricacies of the Companies Act, 2013, illuminating its significance for foreign companies aiming to establish a robust presence in the thriving Indian market. As India’s appeal as a business hub continues to escalate, this guide meticulously navigates the legal framework governing the incorporation, registration, and financial responsibilities for foreign entities. From delineating modes of operation to detailing the essential processes of registration with the Registrar of Companies (ROC), it provides a holistic understanding of the regulatory landscape. Beyond registration, the guide delves into financial obligations, miscellaneous provisions, and the potential ramifications of non-compliance, serving as an indispensable roadmap for foreign companies seeking sustainable and legally compliant ventures in India.

Page Contents

(A) Applicability of Companies Act, 2013 for Foreign Company in India (Sec. 379)

1. Meaning for application of Companies Act (CA), 2013 for foreign Co. in India

(i) India (now) fastest developing country (in world).

(ii) Developed + Non-developed (both) simultaneously countries eagerly interested to invest in different sectors (in India).

(iii) India become hub for doing business being lower cost for production + also having consumer market (population) exceeding 140 crore (both) simultaneously.

(iv) India having 15% world’s consumer (population).

2. Meaning for Foreign Company in India (Section 2(42))

(i) 100% incorporated body corporate (outside India) those having Indian place of business commonly known foreign company working (in India).

(ii) 100% foreign companies permitted for having Indian business through their agent in physical mode or in electronic mode (any).

+ (plus)

(iii) Also conducting Indian business activities in other manner (both) simultaneously.

3. Meaning for foreign co.’s working through Private or Public Limited in India

  • Indian private limited company or public limited company (any) incorporated in India + shares held by foreign company + also by Resident of India (all) jointly.

4. Meaning for foreign co.’s working through Wholly Owned Subsidiary in India

(i) When foreign companies investing in 100% equity capital through incorporation in India or takeover of Indian company (any).

(ii) 100% investments in Indian company’s equity capital commonly known 100% Foreign Direct Investments (FDIs) in India under automatic or approval (any) route under FEMA, 1999.

5. Meaning for foreign co.’s working through Joint Venture (JV) in India

  •  When foreign companies selecting local partner for JV through Memorandum of Understanding (MOU) or Letter of Intent (LOI) commonly known JV agreement.

6. Meaning for foreign co.’s working through Subsidiary in India

  •  Where foreign companies invested for minimum 50.01% Indian company’s shares.

7. Meaning for foreign co.’s working through Branch Office (BO) in India

(i) Foreign companies permitted to establish BO for carrying (same) business (in India)

+ (plus)

(ii) Also foreign companies required to have large business + good profits (both) simultaneously (outside India).

8. Meaning for foreign co.’s working through Liaison Office (LO) in India

(i) Foreign companies permitted to establish LO (in India) for carrying 100% liaison activities (only).

+ (plus)

(ii) Also foreign companies required to incur (spend) 100% expenses (in India) through direct foreign remittance from parent company (located outside India).

(iii) Foreign companies (not) permitted to carry any business activities (in India).

9. Meaning for foreign co.’s working through Project Office (PO) in India

  • Foreign companies permitted to establish PO (in India) to execute projects awarded by Indian companies when RBI’s (specific) approval obtained.

10. Meaning for quickest entity for carrying business by foreign co. in India

(i) Incorporation for private limited company known coolest + fastest way (in India) for carrying business by foreign entity (company).

(ii) 100% FDIs (generally) permitted under automatic route or approval route for FDIs (in India) for private limited company + public limited company (both).

11. Meaning for RBI’s role for working of foreign company in India

  • RBI permitted to allow inward foreign remittance for FDIs under RBI’s guidelines issued from time to time.

12. Meaning for registration of foreign company with ROC in India

(i) 100% foreign companies required to submit documents with ROC for registration maximum in 30 day from date of establishment of place of business (in India) like WOS or JV or Subsidiary company or BO or LO or PO (any).

(ii) Indian company (not) required to re-register (of existing company) with ROC beside 100% FDIs (later) received from foreign company.

13. Meaning for documents to be filed by foreign company with ROC in India

  •  100% certified copies for documents be submitted for registration with ROC like charter or statute or memorandum and articles of company or other instrument (any) constituting or defining constitution of foreign company (outside India).

14. Meaning for document’s translation from Non English to English Language

  • Certain (specific) documents be translated in English Language when original documents not in English language like:

 (i) Address for registered office or principal office of foreign company (outside India).

(ii) List for directors + secretary of foreign company with particulars prescribed by MCA (in India).

15. Meaning for appointment of Resident Director (Authorized Person) in India

(i) 100% foreign companies required to provide name + address of resident (in India) being authorized person who already resided for minimum 180 day in previous year (in India)

(ii) Authorized person required to accept service of notice or other documents (any) be delivery of service by ROC for registration of foreign company (in India).

16. Meaning for determination of address for place of doing of business in India

  • 100% foreign companies required to provide address with ROC for place of doing business for registration of foreign company (in India).

 17. Meaning for declaration filed by foreign co. for old place of business in India

  •  100% foreign companies required to provide particulars with ROC for previous office (if any) opened + also closed (both) simultaneously (in India).

18. Meaning for declaration filed by foreign co. for Non Conviction in + outside India

  • 100% foreign companies required to provide declaration that company’s director or company’s authorized representatives (not) involved or convicted or debarred (any) for company’s formation + also for performing management’s activities (in India + outside India) both simultaneously.

(B) Registration + Financial Statements (both) in India (Section 380 + 381)

19. Meaning for registration of foreign company with ROC in India

(i) 100% foreign companies required to file application (in Form No. FC-1) with ROC maximum in 30 day from date for establishment of place of business (in India) like WOS or JV or Subsidiary company or BO or LO or PO (any).

+ (plus)

(ii) Also to submit copy of RBI’s approval or other regulator’s approval (any) which required to establish place for business (in India) or declaration from authorized representative of foreign company (in India) that such approval (not) required.

20. Meaning for filing of alteration by foreign company with ROC in India

  • 100% foreign companies required to file application (in Form No. FC-2) with ROC maximum in 30 days from date for alteration (in India).

21. Meaning for preparation of Standalone Financial Statements for Business in India

(i) 100% foreign companies required to prepare standalone financial statements for business operation (in India) under Schedule III of CA, 2013

+ (plus)

(ii) Also to prepare required documents under Chapter IX of CA, 2013

22. Meaning for filing of Consolidated Financial Statements for Parent Foreign Co.

  • 100% foreign companies required to submit copy for Consolidated Financial Statements (latest) for Parent Foreign Company with ROC (in India).

 23. Meaning for statement for Related Parties Transactions ( 2(76))

  • 100% foreign companies required to prepare statement for related parties transactions (specified) under schedule III of CA, 2013.

 24. Meaning for list of Related parties 

(i) Foreign holding company (themselves)

(ii) Foreign holding company’s subsidiary company

(iii) Foreign holding company’s holding company

(iv) Foreign holding company’s partner in firm

(v) Foreign holding company’s subsidiary company partner in firm

(vi) Foreign holding company’s holding company partner in firm

25. Meaning for Information’s for Related Parties Transactions in India

(i) Nature for Relationship with related parties

(ii) Description + nature of transactions (both) with related parties

(iii) Amount for transactions with related parties like opening + closing + highest + lowest (all) balances

(iv) Reasons for transactions with related parties

(v) Material impact for transactions on purchaser + seller (both) with related parties

(vi) Amount for written off + amount for written back (both) against outstanding with related parties

(vii) Declaration that transactions carried at Arm’s Length Price (ALP) principle with related parties

(viii) Other detail (if any) to understand impact for related parties’ transactions.

 26. Meaning for preparation of Statement for Repatriation from Indian profits

(i)  Amount for profit repatriated (from India) during financial year

(ii) Amount for capital or loss (any) repatriated (from outside India) during financial year

(iii) Mode for repatriation from India + also from outside India (both)

(iv) Date for repatriation from India + also from outside India (both)

(v) Detail for city where repatriation sent to (other than residence country) of beneficiary

(v) RBI’s approval or other regulator’s approval (if any) required

27. Meaning for preparation of Information’s for repatriation from Indian funds

(i) Statement of transfer of funds (including) dividend being prepared between place of business of foreign company (in India) + other related parties (if any) of foreign company (outside India) including holding or subsidiary or associate (any) company

+ (plus)

(ii) Also date for transfer + also amount (both) transferred or received (any)

28. Meaning for filling of Financial Statements by foreign co. with ROC in India

  •  100% foreign companies required to file standalone financial statements for Indian entity + Consolidated Financial Statements (CFS) for foreign companies (outside India) + also other attachments (all) with ROC maximum in 6 month from date for closing of financial year like up to September 30th every year.

29. Meaning for ROC’s extension for filling of returns by foreign company in India

  • ROC permitted to extend for maximum 3 month like up to December 31st for (special) reason(s) mentioned by foreign company through application in writing with ROC

30. Meaning for account’s audit by Statutory Auditors for business operation in India

  • 100% foreign companies required to get audit of accounts related to business operations (in India) from practicing Chartered Accountants (CA) registered with ICAI

(C) Misc. Provisions for Foreign Company (Section 382 to 384, 392 & 393)

31. Meaning for filing of list for Indian business places by foreign co. in India

  • 100% foreign companies required to file application (in Form FC – 3) being list for place of businesses (in India) on balance sheet’s date.

32. Meaning for displaying of Name + etc. by foreign company in India ( 382)

(i) 100% foreign companies required to exhibit name for company + name for country of incorporation (in English + in local language both) where business located (in India).

(ii) 100% foreign companies required to state name for company + name for country of incorporation (both) on certain documents like:

(a) Letter head for company

(b) Bills for company

(c) Letter papers for company

(d)  Notices for company

(e) Advertisements for company

(f) Other official Publications for company

33. Meaning for service of notice by any person on foreign co. in India ( 383)

  • 100% process or notice or other document (any) be treated deemed served when sent by ROC through speed post or delivered through electronic mode at India’s address already communicated with ROC (in India) by foreign company.

34. Meaning for filling of Annual Return by foreign company in India ( 384)

  • 100% foreign companies required to prepare + also to file (both) annual return for Indian business operations (in Form FC-4) maximum in 60 day from date for closing of financial year like 30th May every year.

35. Meaning for mandatory details for filing of return by foreign company in India

(i) 100% details for promoters + directors + Key Managerial Personnel (KMP) + also changes (if any) from close of previous financial year (all)

(ii) 100% details for remuneration to directors + also KMP (both).

(iii)  100% details for member’s meeting + class of member’s meeting + board of director’s meeting + committee’s meeting + also details for attendance (all).

(iv) 100% details for members + debenture holders + other change (if any) from close of previous financial year (all).

 (v) 100% details for holding + subsidiary + associate company + firm + LLP + etc (all).

36. Meaning for penalty + imprisonment for contravention by foreign co. ( 392)

(i) 100% foreign companies punishable for minimum fine INR 1 lac or maximum fine INR 3 lac + also (additional) maximum fine INR 50 thousand (per day) till contravention continued.

+ (plus)

(ii) Also 100% officers for foreign company’s punishable for maximum imprisonment 6 month or minimum fine INR 25 thousand or maximum fine INR 5 lac or imprisonment + fine (both) simultaneously.

37. Meaning for cancellation contract’s validity + etc. for non compliance (Sec 393)

(i) Foreign company’s contracts be cancelled for failure of provisions specified under section from 379 to 384 of CA, 2013 therefore liable for contract’s cancellation + dealing or also transaction (any) with party (in India).

+ (plus)

(ii) Also foreign company (not) entitled to bring suit for recovery + for claim + for set off + for counter claim + for initiate legal proceedings against contract + for dealing + for transaction (any) except when foreign company (already) complied provisions specified under section from 379 to 384 of CA, 2013.

****

(Author can be reached at email address satishagarwal307@yahoo.com or on Mobile No. 9811081957)

Disclaimer : The contents of this article are solely for informational purpose. Neither this article nor the information as contained herein constitutes a contract or will form the basis of a contract. The material contained in this article does not constitute or substitute professional advice that may be required before acting on any matter. While every care has been taken in the preparation of this article to ensure its accuracy at the time of publication. Satish Agarwal assumes no responsibility for any error which despite all precautions may be found herein. We shall not be liable for direct, indirect or consequential damages if any arising out of or in any way connected with the use of this article or the information as contained herein.

(Republished with amendments)

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One Comment

  1. Prashant khomne says:

    I this is Prashant Khomne Here ..i am representing a korean company in India. My company would like to start its India Operation so we are keen on establishing Indian office to sale and service our products in Indian Market and also out source manufacturing to local company for few days.
    Then we will have our own manufacturing unit.

    Can you help us.
    Need official quotation from your end for end to end consultancy.

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