FOREIGN SUBSIDIARY
Foreign subsidiary companies are mandatorily required to maintain compliance as per Income Tax Act, Companies Act, transfer pricing guidelines and FEMA guidelines. Hence, maintaining compliance for a foreign subsidiary company would include filing of income tax return with the Income Tax Department, annual return with the Ministry of Corporate Affairs and other filings with authorities like Reserve Bank of India or Securities & Exchange Board of India (SEBI).
FDI Reporting to RBI using Form FC-GPR
- Foreign Direct Investment of upto 100% is allowed into Indian Private Limited Company and Limited company for most of the sectors.
- The amount of FDI into India has increased manifold over the last few years due to a booming economy and welcoming environment for foreign investors.
Issuing Shares of Indian Company to the Foreign Investor
- The money received from the foreign investor for purchase of shares in the Indian Company will be accounted under share application money. The Indian Company is required to issue shares within 180 days from the date of inward remittance to the foreign investor, to avoid violation of the FEMA regulations.
FDI Inflow into the Company
An Indian company that is issuing shares or convertible debentures under FDI, can receive the money for such shares or debentures through one of the following modes:
- Remittance through normal banking channels
- Debit to NRE/FCNR account of a person concerned maintained with a Bank
- Conversion of royalty/lump sum/ technical know how fee due for payment or conversion of ECB, shall be treated as consideration for issue of shares
- Conversion of import payables/pre incorporation expenses/share swap can be treated as consideration for issue of shares with the approval of FIPB
- Debit to non-interest bearing Escrow account in Indian Rupees in India which is opened with the approval from AD Category –I bank and is maintained with the AD Category -I bank on behalf of residents and non-residents towards payment of share purchase consideration
FDI Reporting to RBI through Form FC-GPR
Within 30 days from the date of issue of shares, form FC-GPR must be filed with the RBI along with the following documents
- Certificate from the Company Secretary of the company accepting investment from persons resident outside India certifying that:
- “The company has complied with the procedure for issue of shares as laid down under the FDI scheme as indicated in the Notification No. FEMA 20/2000-RB dated 3rd May 2000, as amended from time to time.”; AND
- The investment by the Foreign Investor in the Company is within the sectoral cap/statutory ceiling permissible under the Automatic Route of the Reserve Bank and it fulfills all the conditions laid down for investments under the Automatic Route; OR
- Shares in the company have been issued to the Foreign Investor in terms of SIA/FIPB approval number and date. A copy of the Foreign Investment Promotion Board (FIPB) must be attached.
- Certificate from Statutory Auditors/ SEBI registered Merchant Banker / Chartered Accountant indicating the manner of arriving at the price of the shares issued to the persons resident outside India.
Form FC-GPR and the Company Secretary / Chartered Accountant certificates must be submitted by the company to the Foreign Exchange Department, Reserve Bank of India.
Reporting FDI Inflow into the Company
Within 30 days of receipt of share application money/amount of consideration from the foreign investor, the Indian company must report details of the FDI inflow to the Foreign Exchange Department, Reserve Bank of India. The report must be submitted to the Regional Office of the Reserve Bank of India under whose jurisdiction its Registered Office is located. The form to be filed at this stage is the Advance Reporting Form, containing the following details
- Name and address of the foreign investor(s);
- Date of receipt of funds and the Rupee equivalent
- Name and address of the authorised dealer through whom the funds have been received
- Details of the Government approval, if any; and KYC report (Identify and Address proof) on the non-resident investor from the overseas bank remitting the amount of consideration
- Debit to non-interest bearing Escrow account in Indian Rupees in India which is opened with the approval from AD Category –I bank and is maintained with the AD Category -I bank on behalf of residents and non-residents towards payment of share purchase consideration
Documents Required
Members
- Passport of all the members
- Valid Residential proof of all the members via Bank Statement, Driving License, Aadhaar Card, Utility Bill and Passport attested by Consulate
- Photograph
- Digital Signature
For Registered Office
- Address Proof of the registered office of the society
- NOC from the owner of the building in which registered office is situated
- List of all the members of the governing body with their signatures
- Declaration by the society’s president that he is willing and competent to hold the stated position
Other Details
- Main Object
- Name
- Capital Contributed
- Ratio of share between partners
- Email ID
- Member’s Educational Qualifications
- Share holding Pattern
- Foreign inward remittance details
- Fathers’ Name of Promoters
- Phone number
*Cost of Stamp paper as per Government rules
Deliverables
- Pre Registration Consultation
- DIN for all Directors
- Digital Signature Token for Promoters
- Company Name Approval
- RBI Approval
- MOA + AOA
- Incorporation Certificate
- New Incorporation Kit
- Customized Incorporation Master File
- Company PAN Card
- Company TAN/TDS Number
- Bank Account Opening Document Support
- GST registration
- PF and ESI registration
- FCGPR filing
