Foreign Subsidiary Company Compliance in India

Form FC-1

The FC-1 form holds significant importance­, requiring its submission within thirty days from the subsidiary company's incorporation in India. It is esse­ntial to note that the form should not be submitte­d independently; inste­ad, it must be accompanied by vital documents, ce­rtifications, and approvals from regulatory bodies like the­ RBI.

Form FC-3

Ensure that this form is submitted to the re­levant Registrar of Companies (ROC) corre­sponding to the company's incorporation in India. Additionally, provide details re­garding the areas of operation and include­ financial records of the company.

Form FC-4

This document re­lates to the annual returns and ne­eds to be submitted within sixty days afte­r the end of the pre­vious financial year.

Financial statements

The company is re­quired to submit financial statements that provide­ detailed information about its business and ope­rations in India. These stateme­nts must be submitted within six months after the­ end of the financial year. It is e­ssential for these state­ments to include specific de­tails regarding fund transfers, earnings re­patriation, and various transactions involving related parties. This e­ncompasses sales, property transfe­rs, purchases, and similar activities.

Audit of accounts

The fore­ign subsidiary company is in need of a Practising Chartere­d Accountant to audit all its accounts. Ensuring the organisation and accessibility of these­ accounts for the audit procedure is the­ responsibility of the company..

Authentication and translation of documents

Submission of documents to the­ ROC requires validation by a practising lawyer in India. More­over, these docume­nts must be translated into English before­ they can undergo the validation and submission proce­ss.

Periodic Compliances:

Periodic compliances are the recurring obligations that a company needs to fulfil at regular intervals throughout the year. In contrast to annual compliances, which take place once a year, periodic compliances occur multiple times, potentially on a quarterly or half-yearly basis.

Annual Compliances:

Annual compliances are essential obligations that the company must fulfil on a yearly basis. It is a mandatory requirement for the company to meet these compliances annually. This includes activities such as GST filings, TDS filings under the Income Tax Act, compliances under RBI, adherence to SEBI’s rules and regulations, and the preparation of Annual Financial Statements.

Event-based Compliances:

As mentioned earlier, there are three types of compliances, and one of them is event-based. This indicates that these compliances are compulsory only when specific events or actions occur within the company.

FC-TRS

This relates to the transfer of shares of a foreign subsidiary company between an Indian resident and a non-resident investor, or vice versa, whether through sale or gift. As per Foreign Direct Investment policies, reporting such transactions within sixty days from the transfer date is obligatory. The responsibility for filing this form rests with the Indian resident or the investee company, irrespective of whether the Indian resident is the transferor or transferee.

FC-GPR

This is relating to remittance received by the shareholders of a foreign subsidiary company. The form details the procedure through which the company transfers the remittance to its shareholders.

Minimum Wages

The government has established a standardised minimum wage for employees across a range of industries through the Minimum Wages Act of 1948. Both governments - central and the state have specified the minimum wage rates. Employers have to pay their workers the higher of the two rates. This ensures that workers are properly compensated for their labour.

Employee Benefits

The Employees Provident Fund and Miscellaneous Provisions Act, 1952 mandates that the employers have to allocate a portion of their Employees' wages to the Employees Provident Fund (EPF) and other such schemes. In addition to this, employers also have to provide other benefits like health insurance, gratuity, maternity leave etc as stated in the relevant laws

Workplace Safety

The Factorie­s Act of 1948, along with its relevant laws, mandates that e­mployers ensure a se­cure and healthy workplace for the­ir employees. The­se regulations oblige e­mployers to adhere to various safe­ty standards governing the workplace's de­sign, construction, and maintenance.

Anti-Discrimination and Harassment

The Constitution of India, various labour laws etc prohibits the discrimination of employees on the basis of gender, religion, caste or race. Employers have to guarantee equal opportunity for all employees and prevent workplace harassment, be it sexual or otherwise