22 Post Incorporation Compliance for Foreign Company/Wholly Owned Subsidiary

A foreign company simply means a company or a body corporate which is incorporated outside India but has a place of business in India or or conducts any business activity in India in any other manner. Companies Act, 2013 and Companies (Registration of Foreign Companies) Rules, 2014 deals with the legal framework and provisions of foreign companies. Companies (Registration of Foreign Companies) Rules, 2014 sets out the detailed layman for incorporation of foreign companies or wholly owned subsidiaries (WOS) in India. It is very essential for Board of directors and members of such foreign companies to get aware of Indian laws well versed before setting up such foreign company. Ministry of Corporate (MCA) is a stream regulating all kinds of online fillings with the Government.

The rules governing Foreign Company/Wholly Owned Subsidiary are very strict and rigid in India. Thus it becomes very necessary for the Board of directors and members of the company to know the legal compliances once the company gets registered.

Here are some major post incorporation compliance for Foreign Company/Wholly Owned Subsidiary, non-compliance of which may attract various penal provisions as per Companies Act, 2013, FEMA Act and SEBI (If applicable)

---

1#  Form FC-1- Intimation for place of business

A Foreign Company/Wholly Owned Subsidiary shall once incorporated file form FC-1 with the within 30 days of establishment of place of business in India along with the required documents with the concerned ROC.

Mandatory attachment(s)

1. Certified copy of the charter, statutes, or memorandum and articles of the company or other instrument constituting or defining the constitution of the company (Mandatory).
2. List of directors and secretary of the foreign company (Mandatory).
3. Power of attorney or board resolution in favor of the authorized representative(s) (Mandatory).
4. Reserve bank of India approval letter (It is mandatory to attach attested copy of such approval).

---

2#  Disclosure of other place of business if India (If Any)

It is mandatory to enter FCRN (Foreign Company Registration Number) of all other places in India if any by such Foreign Company Registration Number. Maximum 7 such offices details can be entered. If there are more than 7 then details can be given in necessary attachment(s)

---

3#  eform FC-2

Every foreign company on alterations in the charter or statute or any other instrument governing the company, alterations in the particulars of Director/Secretaries of the foreign company, any change in the registered or principal office of the company in the country of incorporation, any change in the particulars of authorized representative(s) of the company and any change in other places of business in India of the company, has to file eform FC-2 within 30 days of the alterations made.Mandatory attachment(s) Copy of approval letter (it is mandatory if any approval is required for such alteration)

---

4# Payment of Stamp Duty

Stamp duty on eform FC-1 shall be paid electronically through MCA government site. epayment of stamp duty is now applicable to every state of India. 

---

5# Opening of Bank Account

Once Foreign Company/Wholly Owned Subsidiary is incorporated, the first and foremost step is opening of Bank Account in the name of the Company. Opening of bank account may require following documents-

Mandatory Documents

• Copy of Articles of Association of the Company
• Copy of Memorandum of Association of the Company
• Challan copy of Spice form
• Certificate of Incorporation
• Copy of Pan Acknowledgement
• Copy of Board Resolution
• Copy of prospectus if needed
• Registered office address proof of the company
• Identity proof of all Directors / Authorized Signatories PAN card of Director
• Passport
• Voter Identity Card
• Driving License
• Aadhaar card issued by Unique Identification Authority of India (UIDAI)
• Copy of PAN allotment letter
• Copy of the telephone bill

---

6# First Board Meeting

Section 173(1), of The Companies Act 2013 deals with conduct of Board meeting of the companies. As per the provisions of the section, a company shall within 30 days from the date of its incorporation conduct first board meeting of the company. Directors can attend the meeting either in person or through video conferencing.

---

7# Deposit of Share capital money

Once bank account is opened, the next compliance is of depositing the share capital money in the bank account within 60 days from the date of incorporation of the company.

---

8# Issue of Share Certificates

The company shall issue share certificates to the shareholders of the company within 60 days from the date of incorporation of the company and pay stamp duty within 30 days from the date of allotment of shares as per the relevant stamp act applicable on the state.

---

9#  Intimation of Advance remittance in form ARF

On incorporation of Foreign Company/Wholly Owned Subsidiary, it is mandatory to intimate RBI through AD bank in ARF form within the period of 30 days from the date shares subscription money have been received from subscribers.

---

10# Intimation of share allotment money in form FCGPR

On incorporation of Foreign Company/Wholly Owned Subsidiary, it is mandatory to intimate RBI through AD bank in form FCGPR within the period of 30 days from the date of allotment of such shares.

Read About – FCGPR 

---

11# Appointment of Auditors within 30 days

As per Section 139 of the Companies Act, 2013 every company is required to appoint its first auditor within 30 days of incorporation by its board of directors and in case the board of directors fails to appoint the auditor within said period of 30 days then they shall call an extraordinary general meeting of shareholders for appointing an auditor. The appointment of auditor through shareholder must be completed within 90 days.

---

12# Affixing Sign Board

Once the company is registered, then every foreign company is required to affix its name at every place from where it is carrying on business all over India.

---

13# Printing of letter heads

Section 12 mandate a company to print the following information on all its Business Letterhead / Billheads/Letter Papers etc.

• Name of the Company    
• Address of Registered Office
• CIN Number
• Telephone No.
• Fax (if any)
• E-mail Id (
• Website address ( if any )

---

14# Disclosure of interest

At First board meeting, every director is under obligation to disclose his interest in any company/firm/body corporate/association of individuals as outlined in section 184(1) of the Companies Act 2013. Any changes in the disclosures shall be intimated by the director to board of directors in its first meeting held during each financial year. An independent director, if any, must give a declaration that he meets the criteria of independence during the first board meeting as a director.

---

15# Maintenances of Statutory Registers 

It is mandatory as a post incorporation compliance for Foreign Company to maintain statutory registers like-

• MGT-1: Register of Members
• MGT-2: Register of Debenture holders Register and Index of Beneficial Owner
• MGT-3: Foreign Register of Members, Debenture holders, other security holders or beneficial owners residing outside India
• Form SH-2: Register of Renewed and Duplicate Share Certificate
• Form SH-3: Register of Sweat Equity Shares
• Form SH-6: Register of Employee Stock Options
• Form SH-10: Register of Shares or Securities Bought Back Register of Directors and KMPs Register of Deposits
• Form CHG-7 Register of Charges
• Form MBP-2: Register of Loans/Guarantee/Security and Acquisition by Company
• Form MBP-3: Register of Investments not held in its own name
• Form MBP-4: Register of Contracts or Arrangements in which Directors are interested

---

16# Declaration of Commencement of Business

As a post incorporation requirements of a company, every company is required to file a declaration of commencement of business within 180 days from the date of incorporation of the company in accordance with the Companies (Amendment) Ordinance 2018, Section 10A, in form INC-20A.

---

17# Books of Accounts

As per section 128, every company shall maintain proper books of accounts which shall represent true and fair view of the financial disclosure of the company.

---

18# Apply Shop Act Registration

As a post Incorporation Compliance for Foreign Company, the next important step is obtaining shop act license immediately.hop & Establishment registration is state requirement . From state to start registration provisions may change. The basic documents for obtaining shop act license is MOA, AOA, COI, Directors KYC documents etc.

Content of Shop Act as below

1. Name of Business
2. Activity of Business
3. Date of Registration
4. Address of office
5. Number of employees

Apply Shop Act Registration

---

19# Apply GST Certificate

Every business with annual turnover exceeds Rs. 40 lakhs or Service providers 20 lakhs is required to GST Registration under Goods and Services Tax (GST). However this registration can be applied suo moto. Where Foreign company finds that post registration , GST Registration is important for business then can apply for GST registration. 

---

20# Professional Tax Registration

It is mandatory to obtain Professional Tax registration to company and all directors, all designated partners and all employers. However, all Union Territories including NCT of Delhi and certain states like Haryana, Punjab, Rajasthan, Uttar Pradesh etc. does not have any law to tax profession.

---

21. Obtain Import Export Code (IEC)

IEC (Import Export Code) is required to be obtained by the wholly owned subsidiary company in India if the business of the company is involved in the business of import/ export of goods and services.

---

22. Apply for Trade Mark registration

Foreign Companies should make immediate provisions for safeguarding interest of trademark, copyrights, patents rights by making an application of trademark at www.ipindia.nic.in. Application of trademark is not mandatory for foreign Company but it is strongly recommended to apply for registered trademark owing to its huge legal infringement of rights benefits.

---

Conclusion:

In this globalised legal world where every company is under obligation to comply with basic legal framework, Post Incorporation Compliance for foreign Company/ Wholly Owned Subsidiary is most essential and basic need from compliance in order to avoid heavy monetary as well as non-monetary penalties.

---