Operating a foreign firm in India necessitates adherence to a number of legislation and norms. These principles are outlined in the Firms (Registration of Foreign Companies) Rules, 2014, which govern the registration of foreign companies in India. These regulations cover the publication of information about directors and secretaries to the Registrar. It is critical for business owners to stay informed about such policies in order to ensure compliance and avoid penalties.
Due to the disqualification of enterprises with less than 20% domestic content from government contracts from public procurement opportunities, multinational companies have scrambled to establish operations in India. Foreign companies are rushing to register in India to comply with the ‘Atma Nirbhar Bharat’ guidelines, according to Indian accounting firms. Ashok Maheshwari and Associates, Amit Maheshwari’s organization, offers business consultancy services to overseas firms and individuals. He believes that India is still not an attractive target for large-scale corporations for foreigners.
Company (Foreign Company Registration) Regulations
1: Within thirty days of establishing a business in India, all foreign companies must supply the Registrar with particular information. Such firms must also disclose information on a list of directors and secretaries, in addition to the information required by the Companies Act of 2013.
2: According to the Companies (Registration Offices and Fees) Rules, 2014, such businesses must file Form FC-1 and pay the relevant fees to the Registrar. These applications must include the supporting papers listed in Section 380 of the Rules, sub-section (1). These businesses must additionally submit a certified copy of the Reserve Bank of India’s permission. The Foreign Exchange Management Act also requires approval affidavits from other regulatory bodies.
3: If the registration document supplied to the Registrar is altered, the foreign business must file Form FC-2 with all the details of the change. The company must file this application within thirty days of the change taking place.
Financial Statements of International Businesses
According to Schedule III of the Rules, all foreign businesses must provide a financial statement for their business operations in India. All such documents must be delivered to the Registrar within six months of the financial year’s end. If required, the Registrar may extend this period by three months in writing if unusual circumstances exist. The following are the financial documentation that such businesses must keep and file:
- Accounts of Companies and the parent foreign company’s most recent consolidated financial statements are among the documents to annex under Chapter IX of the Act.
- If the documents aren’t in English, a certified English translation is required.
- Statement of the related party transaction including the following information:
- In India, the name of the person who is a partner
- The nature of such a connection
- Description and kind of transaction
- Amount of such a transaction over the course of the year
- Opening, closing, highest, and lowest balances over the course of the year
- The reason for such a transaction
- The transaction’s major impact on both parties
- The sum is written off or refunded to the parties involved.
- A statement stating that such transactions were conducted at arm’s length.
- Any further information about the transaction that might help you comprehend its financial impact.
Profit Repatriation Statement With The Following Information:
- Profits repatriated Amount of profits repatriated
- Recipients of repatriation
- Repatriation mode and form
- Dates and details of repatriation if it is to a jurisdiction other than the beneficiary’s home country.
- The Reserve Bank of India has given its approval.
The Following Information Is Included In The Statement Of Money Transfer:
- The day on which such a transfer takes place is referred to as the “transfer Amount of funds received or transferred
- Mode of receiving or transferring funds
- The reason for the receipt or transfer
- The Reserve Bank of India’s or any other authority’s approval, if any, is required.
Accounts and Returns Audit:
Every foreign firm operating in India must have its accounts prepared and audited by a practising chartered accountant in India. The provisions of the laws and regulations governing such audits will apply to the foreign firm mutatis mutandis.
Every foreign firm must additionally file Form FC-3 with the Registrar, which contains a list of all business locations in India as of the balance sheet date. They must also prepare and file an annual return using Form FC-4 within sixty days of the end of their fiscal year. Such institutions are required to file and transmit such returns and papers to the Registrar of New Delhi.
If a foreign company ceases to do business in India, it is required to notify the Registrar of its closure. The corporation is no longer obligated to deliver any documents to the Registrar after the notice is received by the Registrar.
Certification of International Businesses
Any statutes, charters, memorandums, articles, or other items forming or specifying the company’s constitution must be officially certified, as specified below. Any document that has been amended and handed to the Registrar must be certified in the same way.
If the firm is formed outside of the Commonwealth, one of the following individuals might certify the above-mentioned copy:
- An official from the government of the country where the original business is located.
- Such a country’s notary
- An organization’s officer
These officials can certify the documents via the methods mentioned below:
- Signature or seal authenticated by a diplomatic or a consular officer
- The certificate of the company’s officer must be signed before an individual has the authority to administer an oath.
If the corporate incorporation occurs in an exceedingly country within the Commonwealth, the subsequent individuals can certify the copy mentioned above:
- An official of the govt where the initial company resides
- Notary of such a rustic
- An officer of the corporate, on oath before a person with the ability to administer an oath within the Commonwealth
If the corporate incorporation occurs in an exceedingly country outside the Commonwealth but could be a party to The Hague Convention, 1961, a politician of the govt where the original incorporation is committed can certify the copy, which might then have to be duly apostilled as per Den Haag Convention
Additionally, the subsequent documents must notarise and apostille within the country of origin as per The Hague Convention:
- List of directors and secretary
- Signatures and therefore the address on the Memorandum of Association and proof of identity of foreign nationals.
Authentication of Translated Documents
All the documents filed with the Registrar by the foreign companies must be in English, and if not, they need to attach a translation in English duly certified as per the given rules. If such translations are made outside India, the subsequent individuals can certify it through their signature and seal:
- The official having custody of the first
- A notary of the country where the corporate with the incorporation
- If a rustic lie outside the Commonwealth, a diplomat or a consular officer is empowered to try and do so.
If such translations are made in India, the subsequent individuals can certify it through their signature and seal:
- An advocate, an attorney, or a pleader entitled to seem before any tribunal
- Further, an affidavit of a competent person having, within the opinion of the Registrar, an adequate knowledge of the language of the initial and of English.
Documents to Be Annexed to the Prospectus
The following documents must be annexed to the prospectus:
- Any consent to the difficulty of the prospectus is required from someone as an expert
- Contracts for an arrangement of the decision-maker or manager or a memorandum giving full particulars
- All material contracts, not entered within the ordinary course of business, but entered within the preceding two years
- A copy of the underwriting agreement
- A copy of the ability of the attorney