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What are the documents to be filed by a foreign company prior to the commencement of new branch in India?

A foreign company decides to constitute in India a subsidiary company. What are the essentials to be complied with?

A foreign company according to the Companies Act are classified as two types; companies incorporated outside India, which have established a place of business in India after the commencement of Companies Act, 1956 and companies before the commencement of Act, and continued to have place of business in India.

Foreign companies can establish a wholly owned subsidiary in sectors where 100% foreign direct investment is allowed under the FDI policy.  Application Form FC-1, digitally signed by authorized representative of the foreign company to be filed with Registrar of Companies (ROC) for registration and incorporation.  As soon as the company is registered in India as an Indian Company, all the Indian laws are applicable to the subsidiary of the foreign company.  DIN for Directors of a foreign company is not required; however, DSC of the authorized representative is mandatory.

What are the features of a foreign company?

Foreign Companies can set up their operations in India through:

  1. Liaison Office/Representative Office:  The Liaison office’s is limited and could not undertake the commercial activity in India.  Its role is to send information regarding the market opportunities in India and providing information about the foreign company and its products to the Indian customers.    RBI granted permission for the establishment of liaison office in India.
  2. Project Office:  This office is started to perform certain projects in India.  RBI approved the foreign companies to establish project offices in India subject to certain conditions.  The first and foremost condition is that these establishments should not carry any business activity other than the activities related to the specified project.
  3. Branch Office: Foreign companies which are engaged in manufacturing and trading activities are allowed to set up a branch office in India, however, they are not allowed to carry out manufacturing and trading in India on their own, but they are required to subcontract to Indian manufacturer.

The Companies Act, 2013

Foreign Companies after their establishment of place of business in India must file the following documents within 30 days from the date of such establishment with Registrar of Companies:

  1. Certified copy of the charter, statues, or memorandum and articles of the company or any other instrument defining the company’s constitution.
  2. Should provide the full address of the registered office of the company
  3. List proving the names of the Directors of the company and its secretary with full details including names, nationality, addresses and nature of businesses
  4. Names and addresses of the persons resident India who are authorized to accept the notices or any other documents on behalf of the company

The Company should exhibit outside with its name ended with “Limited” or “private limited” as the case may be.  The prospectus of the company issued in India should disclose the said information.

The Companies (Amendment) Act, 2015

Provisions related to annual return i.e Section 159 and Section 209 related to maintenance of book of accounts, inspection of books under Section 209A, and Section 233 B related to audit of cost accounts are applicable to the Indian company of a foreign company.

As per MCA General Circular No. 23/2014 dated 25/6/2014, a registered subsidiary of a company incorporated outside India under the Companies Act, 1956, either as private company or a public company will be continued to be as a private company or public company as the case may be.

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Adv. Anitha Gutti

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