I. Meaning:

Wholly owned subsidiary is an incorporated entity formed and registered under the Companies Act, 2013. It is a distinct legal entity, apart from its shareholders.

II. Constitution:

1. Company form of organization

2. Separate legal entity

III. Requirement of Prior Approval of RBI:

Not required In case of FDI in sectors permitted under Automatic Route

IV. Financial Track Record of the Parent Company:

No such requirements

V. Permitted activities in India: 

As per its ‘main objects’ stipulated in the Memorandum of Association subject to Indian regulations

 VI. Validity period of RBI Approval:

 Until the company decides to close down

VIII. Registrations:

 i) RBI Guidelines: 

There is no such registration required. Only Form FC-GPR is required to be filed within 30 days after making the allotment of shares to Subscribers of MOA. This will be after Incorporation.

ii) Registration with ROC: 

Wholly owned Subsidiary needs to be Incorporated by filing form INC-32 along with prescribed documents with the Registrar of Companies.

iii) Other Registrations:

a.Permanent Account Number

b. TAN

c. Shops and Establishment

d. Professional Tax

e. GST

VIII. Annual Activities:

i) FEMA / RBI Compliances 

Reporting on or before 15th of July of every Financial Year in Form FLA about the Foreign Assets and Liabilities of the Company

ii) Companies Act Compliances:

 a. Board Meetings

  • In each Financial Year, minimum 4 Board Meetings should be held and gap between 2 consecutive meetings should not be more than 120 days.
  • Notice, Proof of sending notice, attendance sheet and Minutes of each Meeting to be maintained in proper manner.
  • In case of Meeting held through video conference, the video recording should be maintained.

 b. Annual General Meeting 

  • Within 6 months from the date of closure of Financial Year, every Company should hold the Annual General Meeting. However, ROC can extend the said period to not more than 3 months on application made in writing for any special reason
  • The Annual General Meeting should be held within the local limits of city, where the registered office of the subsidiary is situated.

c. Annual accounts needs to be filed with the ROC

  • Company shall file the financial statements within 30 days from the date of Annual General Meeting. (Form AOC-4) along with the prescribed documents.

d. Annual Return

  • Annual Return shall be filed by the Company within 60 days from the date of Annual General Meeting in Form MGT-7:

e. Form DIR-3 KYC for each Director:

  • Each individual Director should file Form DIR-3 KYC with his / her details to Registrar on or before 30th April of every year.

IX. Other guidelines:

The Private Company registered in India:

  • Should not accept deposit from Public.
  • Should not give loan to its Directors
  • Can borrow locally
  • Can take the external Commercial Borrowings subject to RBI guidelines

Disclaimer:

The Views expressed are solely of the Author and the contents of this article is to share the Knowledge on subject matter. Expert advice should be sought for your specific circumstances.

Author Bio

Qualification: CS
Company: N/A
Location: Bangalore, Karnataka, IN
Member Since: 26 Feb 2019 | Total Posts: 13
I am an Associate Member of Institute of Companies Secretaries of India and a Practicing Professional having office in Bangalore. I have experience in legal and Company Secretarial matters, Trade Mark law, IBC and other allied laws. View Full Profile

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