News Ticker

What are the features of a foreign company?

I own a company in Dubai. Now I am planning to open a new branch of my company in India. What are the essentials to be complied by me?

Under the Foreign Exchange Management Act (FEMA), any person who is not resident of India, should obtain prior approval from Reserve Bank of India, to establish a branch, or a liaison office or any other place of business

The definition of the foreign company is defined under Section 42 of Act, 2013, wherein it defined “foreign company” as any company or body corporate incorporated outside India, which has its place of business in India through its agent physically or by electronic mode and conducts its business in India.

A foreign company is required to register with Registrar of Companies within 30 days from the date of establishment of its company in India and should comply with the provisions of Company Act that are applicable to them and their business. Nevertheless, all foreign companies are not required to comply, only the foreign companies that held 50% or more than that in a paid-up share capital in Indian companies need to comply the Act.

Read Also:

The Companies (Amendment) Act, 2015
The Companies Act, 2013

Compliance under Companies Act:

  •  Foreign company should file their registered documents in form FC-1, duly signed by authorized representative of foreign company including the Memorandum and Articles of main incorporated company in the place outside India with ROC. (Translated in English should be filed)
  • Full address and list of directors and secretary of the Principal office of the Company
  • Particulars of the authorized person of the Indian company to whom further correspondence to be made (for the purpose of effective service of notice or document in future by the Registrar)
  • Procedure for issuance of prospectus of the foreign company should comply Section 34 to 36 of Acts
  • Balance sheet, profit and loss account and other necessary documents of the foreign company should be filed with ROC wherein the list of all its Indian companies to be furnished.
  • Books of accounts to be maintained in Indian office especially related to the transactions that are made in India.
  • Name of the foreign company should be displayed outside the office in English and in local language

Compliance under FEMA, 1999

A foreign company’s Liaison office or Branch Office or Project Office should comply the following under FEMA, 1999:

  1. Report containing details of the Indian company to be submitted in Annexure 3 within 5 five days from its establishment with Director General of Police of the State.
  2. Required to submit an undertaking that the Indian company carries activities permitted by RBI, in the form Annexure 4 which is called as Annual Activity Certificate, to be obtained from Chartered Accountants to be filed by March 31 each year along with audited balance sheet.

Adv. Anitha Gutti

Read Also:

Leave a Reply