Post incorporation ROC compliances of Private Limited Company in India

Every year, thousands of Private limited company registration takes place in India. Further, these are registered both as normal private limited company as well as in the form of wholly owned subsidiary of foreign parent company.

In this write up, we would understand various taxation, regulatory and other compliance which needs to be completed post company formation in India. 

ROC Compliance:-

1.      Appointment of first auditors of the Private Limited company 

First auditors of the company shall be appointed within 30 days of private limited company registration in India. This is not applicable in case of Government Company. The first auditor will hold office till end of first annual general meeting.

 

2.      Holding of First Board meeting of the Private Limited company

Every private limited company has to hold first board meeting of its directors within 30 days of company formation in India. Further, atleast 4 board meetings shall be held every year and gap between two board meetings shall not be more than 120 days.

3.      Applying for Certificate of Commencement of Business 

Within 180 days of private limited company registration, every company shall apply for certificate of commencement of business by filing necessary forms with ROC. This is an acknowledgement of the fact that all the subscribers have contributed towards their share application money.

4.      Disclosure of interest of the Director 

Every director shall disclose in the first board meeting, his interest in any company or firm or body corporate or association of individuals as prescribed under companies Act. This disclosure needs to be made every year in the first board meeting or as and when there is change in disclosure. Form MBP-1 needs to be filed with ROC for disclosing interest of such directors.

5.      Holding of Annual General Meeting of the Company 

Post company formation in India, it is mandatory to hold Annual General Meeting every year within end of 6 months from close of financial year. Further, the gap between two AGM shall not be more than 15 months. Also, the first AGM shall be held within 9 months from close of the financial year. The agenda of AGM is normally discussion and adoption of financial statements, appointment or reappointment of statutory auditors, declaration of remuneration and dividend etc.

6.      Filing of annual return in form AOC-4 before ROC 

Within 30 days of end of AGM, every company is required to file annual ROC return in form AOC-4 along with copies of balance sheet, statement of profit and loss account, notice of AGM, MGT-9 and Director’s report.

7.      Filing of annual return in form MGT-7 before ROC 

Within 60 days of end of AGM, every company is required to file annual ROC return in form MGT-7. In case of companies having Turnover of Rs 50 crore or more or in case of companies having paid up capital of Rs 10 crore or more, form MGT-7 need to be certified by company secretary in practice in form no. MGT-8.

8.      Filing of  form DPT-3 before ROC 

Every company having outstanding amount or loan as on 31^st March has to file form DPT-3 mentioning details of such outstanding amount. This form needs to be filed even if amount outstanding is falling under definition of deposit or not. Due date of filing is 30^th June.

9.      Filing of  form MSME (Half yearly) before ROC 

Form MSME needs to be filed by every company which has outstanding dues payable to MSME beyond 45 days. This form need to be filed half yearly basis. For first 6 months, due date is 31^st October and for last 6 months, due date is 30^th April.

10.  Director KYC by filing form DIR-3KYC 

Every director of the company, who has obtained DIN before 31^st March 2020, needs to do director KYC every year by filing form DIR-3KYC. Failure to do so may lead to deactivation of DIN as well as penalty of Rs 5000 for each DIN.

11.   Statutory registers and records 

Every company is required to maintain statutory registers prescribed under companies act along with minutes of board meetings, minutes of AGM at the registered office of the company. 

12.  Share certificates 

Every company shall issue share certificates to its shareholder within 60 days of company formation in India. Further, whenever additional shares are issued and allotted, share certificates need to be issued within 60 days of such allotment.

13.  Subsidiary Company needs to report share subscription money

In case of subsidiary company registration in India, share subscription money received in Indian bank account from foreign shareholders in the form of FDI needs to be reported to RBI by filing form FCGPR etc.

 

Registration of Foreign Companies in India Step by Step Guide

Owing to its huge middle-class consumer base with good purchasing power, fastest-growing economy, democratic governmental setup, government's initiative of ease of doing business in India, and schemes like Make in India are attracting more and more foreign companies and people in business for setting up their businesses in India.

 

Any company can do business and invest in India through various routes and conduct business operations. However, first, they need to decide whether they will be engaged in commercial activity or a non-commercial activity in India since that will be deciding factor to make a further decision about the type of entity to be set up in India.

In this write-up, we will discuss various options available for foreign company registration in India and its procedure.

What is a foreign company in India?

As per the Companies Act, 2013, a foreign company is a company or body that has been incorporated outside India and whose place of business in this country is through an agent or by itself. Accordingly, foreign companies are not Indian companies.

What are the various options available for foreign company registration in India?

Various options available for foreign company registration in India are as follows:

1.    In case the foreign company wants to do only water testing in India. The best option is to register a liaison office in India. It is a representative office that cannot do any commercial activities and only acts as a communication channel between the foreign parent company and other Indian customers. RBI approves the liaison office. For the same, an application needs to be filed to RBI through AD Banker, and once approval is granted, ROC needs to be intimated about the registered office of the LO. RBI permits only limited activities in which LO can be engaged. Approval for liaison office registration is given only for three years, after which an application needs to be made for an extension. Wholly Owned subsidiary Company in India

2.    Another option available to a foreign company is establishing a branch office of the parent company in India. However, a branch office is always considered a permanent establishment of a parent company in India. Accordingly, all transactions between the Indian branch and the parent company shall be at arm's length. The branch office can also be engaged in only those activities which are permissible by RBI. They cannot apply to any manufacturing activities of their own. RBI approves Branch office registration. For the same, the application needs to be filed to RBI through AD Banker, and once approval is granted, ROC needs to be intimated about the registered office of the BO.

3.    Suppose a foreign company has obtained any project for execution in India and the duration for short terms, say six months to 2-3 years. In that case, the Foreign Company can establish a project office in India. RBI approves the project office. For the same, the application needs to be filed to RBI through AD Banker.

4.    When a foreign company intends to have full-scale business operations in India and with a long-term vision of business operations, it can opt for subsidiary company registration in India or LLP registration. A subsidiary company would be considered an Indian company and would have a separate legal entity compared to a foreign parent company. Here, a foreign parent company would hold almost all or majority shareholding in the Indian company. One of the advantages of a subsidiary company is that an Indian company can retain the parent company's brand name.

5.    ROC/MCA grants approval for both subsidiary companies as well as Limited Liability Partnership. The subsidiary company can be set up as a private limited company or a public limited company.

Following steps are involved in private limited company registration in India:

1.    Obtaining a Digital Signature Certificate (DSC).

2.    Apply for name availability through the Reserve Unique Name (RUN) form.

3.    E-Form SPICe INC 32

4.    Drafting and printing the Memorandum of Association (MOA) and Articles of Association (AOA). In the Indian subsidiary registration process, physical copies of both are required.

5.    Application for Permanent Account Number (PAN) and Tax Account Number (TAN).

6.    Provident Fund (PF) and Employee State Insurance (ESI) Registration.

7.    Once the procedure is completed, the Registrar of Companies (ROC) issues an Incorporation Certificate as proof of the company being registered.

What additional things need to be done once the foreign company is registered in India?

1.    If business activities fall under the government approval route, prior approval of FIFP needs to be taken before doing any business activities in India.

2.    Suppose the foreign company has been registered as a subsidiary company in India immediately upon incorporation. In that case, it needs to open a current account in Bank, and shareholders need to contribute share subscription money in a said bank account.

3.    After receipt of share subscription money, RBI compliance needs to be done to intimate them about the receipt of FDI by filing necessary forms.

4.    Share allotment needs to be done, and share certificates need to be issued.

5.    GST registration need to be applied for selling goods or providing services in India

6.    Import Export Code (IEC) needs to be applied in the import of goods or export of goods from India.

7.    Any other sector-specific registration needs to be taken, as applicable.

Setting up Wholly Owned Subsidiary Company in India

Wholly-owned subsidiary in India is a form of company registration in which the parent company owns all the shares of the subsidiary company. It implicates that the parent company has full control over the subsidiary and can select the board of directors in such a company. As per the local laws in India, this type of company are recognized as an Indian company making it eligible for benefits like deduction and exemption from taxes.

 

 

 

Advantages of Subsidiary Company Registration in India:

1. Since the parent company already has its brand name, the Indian subsidiary can also use it; thus, it provides lots of benefits to both the subsidiary and the parent company.
2. Such companies have limited liabilities making it one of the best forms of company registration.
3. Provides the parent company with strategic control that it can execute over the wholly-owned subsidiary.
4. The parent and the subsidiary company can have a common financial system by sharing administrative and other expenses, which can be cost-effective in the long run.
5. The trade secrets, confidentiality, expertise, operational control, and technical knowledge of the parent company is fully protected and secure in the Incorporation of a wholly-owned subsidiary.

Subsidiary company registration in India is the most popular form of Foreign company registrationin India.

 

Requisites for registration of Wholly Owned Subsidiary in India:

1. A minimum of two shareholders or members are required for Incorporation.
2. At least two directors are required. Out of this, one must be an Indian citizen.
3. Directors can be shareholders.
4. No limit on minimum paid-up capital is required.
5. All the directors in the subsidiary company must have Director Identification Number (DIN).
6. All the directors must have Digital Signature Certificate (DSC).

Procedure for Subsidiary Company Registration in India:

1. Application for obtaining Digital Signature Certificate (DSC) by any two directors.
2. Reservation of the company's name by filling the form with the Registrar of Companies (ROC) to approve the company's proposed name.
3. Once the ROC approves the name, drafting of Memorandum of Association (MoA) and Articles of Association (AoA) is done, and All the directors apply director's Identification Number (DIN).
4. An application through Form INC-7 is to be filed for Incorporation of the wholly-owned subsidiary in India.

Once the applicant files all the applications, forms, and documents for Incorporation, they must pay stamp duty and ROC fees online, based on the company's authorized capital. If the ROC verifies all the documents, the Registration Certificate of the Wholly Owned Subsidiary Company is sent through email to the applicant.

 

Certain Post Incorporation formalities are also required to be done by Subsidiary Company in India, like opening a bank account, bringing share subscription money in the bank account, applying for GST registration, RBI and ROC compliance relating to sharing subscription money received in India, which is considered as FDI.

 

Documentation Required for Incorporation of Wholly-owned subsidiary:

 

1. Address proof of the office: Rent agreement, latest electricity bill or any other equivalent document.
2. Permanent Account Number (PAN) for the Indian nationals.
3. Address proof such as electricity bill, bank statements, rent agreement, telephone bill etc.
4. Photo identity proof such as driving license, AADHAAR card, passport etc.
5. For Foreign Nationals: 
6. Passport
7. Photo Identity Proof certified by the Indian consulate, such as any government license, document.
8. Address proof containing the full name, date of birth and photo certified by the Indian consulate, such as bank statement, ID, electricity bill etc.

To incorporate a wholly-owned subsidiary in India a foreign company must carry out the aforementioned procedure without a hitch. However, since the Indian subcontinent has become a hotspot for growing and expanding businesses and making an investment, the ease of in-laws and procedures have given the foreign companies and investors ample chances in setting up business in India.