Tax Residency and Filing Obligation Indian subsidiaries are considered resident companies for tax purposes. They are taxed on their global income under the Income Tax Act, 1961. Income tax return (ITR) filing is mandatory regardless of profit or loss during the...
Penalties Under the Companies Act Monetary penalties are imposed for failure to file statutory forms such as MGT-7, AOC-4, or PAS-3. Directors and officers in default may be personally liable for fines and imprisonment depending on the violation. Continuous non-filing...
Equity Capital Infusion The foreign parent company can infuse working capital by subscribing to additional equity shares of the subsidiary. This requires board and shareholder approval, and compliance with FEMA and Companies Act. Funds must be remitted through proper...
Eligibility Under Law A subsidiary can participate in a public listing if it is structured as a public limited company. It must comply with the eligibility criteria under SEBI (Issue of Capital and Disclosure Requirements) Regulations. The company should have a...
At the Time of Incorporation The initial shareholding pattern is declared in the incorporation documents filed with the Ministry of Corporate Affairs (MCA). Form SPICe+ Part B includes the subscribers’ details, number of shares, and shareholding percentage. This data...
Definition of Related Parties Related parties include the holding company, fellow subsidiaries, key managerial personnel, directors, and their relatives. Any entity in which a director or key manager holds significant influence is also considered related. The...
Regulatory Compliance and Filings Ensures the subsidiary complies with the Companies Act, 2013 and other applicable laws. Prepares and files statutory forms such as MGT-7, AOC-4, PAS-3, SH-7 with the Registrar of Companies. Maintains regular communication with...
Permissibility Under Law Yes, a subsidiary in India can make investments in other companies. The Companies Act, 2013 allows any company, including subsidiaries, to invest in shares, debentures, or securities of other entities. Investments can be made in Indian or...
Purpose of Valuation Share valuation is conducted when issuing shares, transferring ownership, or infusing capital. It is required during mergers, acquisitions, buybacks, or allotment to the parent company. Accurate valuation ensures compliance with the Companies Act,...
Internal Drafting and Strategy Alignment The subsidiary’s management prepares a detailed business plan covering objectives, operations, budgets, and timelines. The plan must align with the strategic vision and goals set by the parent company. Inputs are taken from...