Annual Return of a Foreign Company [Form FC-4]

Introduction:

Each foreign Company will plan and record, inside a time of sixty days from the last day of its monetary year to the Registrar yearly return in Form FC.4 alongside such charge as given in the Companies (Registration Offices and Fees) Rules, 2014 containing the specifics as they remained on the end of the monetary year. E-Form FC-4 is needed to be documented as per Section 384(2) of the Companies Act 2013 and Rule 7 of Companies (Registration of Foreign Companies) Rules, 2014 which are recreated for your reference.

Foreign companies should plan and record the yearly return of the company in Form FC-4 inside a time of sixty days from the last day of its monetary year. Any record which ought to be conveyed from a Foreign Company can be conveyed to the Registrar of Companies with ward over New Delhi.

Foreign Company Establishment & Compliances – Companies Act 2013

As per Section 2 (42)

A foreign company is a company or body corporate incorporated outside India which

(a) has a place of business in India whether by itself or through an agent, physically or through electronic mode; and

(b) conduct any business activity in India in any other manner

Simple definition give understanding that even a company incorporated outside India, has simple electronic present, which may be used for business in India is a foreign company

Note

In the event that Foreign Company had no settled business environment at the hour of marking the agreement, the company isn’t represented by limitation under Act.

A simple arrangement of comprised lawyer for the motivation behind marking contract doesn’t imply that an unfamiliar Company has set up business in India.

Legal structures in which a Foreign Company can set up its foundation in India:

Branch Office
Liaison Office
Project Office
Corporate Entity which could be completely or incompletely possessed by the Foreign Company (FIPB course).
Joint Venture/Partnerships and so forth

For Establishment of office of unfamiliar Company in India. We need to follow arrangements of two Acts:

RBI Act
Companies Act, 2013

Companies Act

Procedure After Getting the RBI approval

Each Foreign Company enrolled with RBI will get itself enlisted with the Ministry of Corporate Affairs; it is an enrolment of Foreign Company in India. On such enrolment a CIN for example Corporate Identity Number is distributed by the Registrar of Companies.

An unfamiliar Company set up a position of business in India ought to submit the following reports will be loaded up with the Registrar of Companies for enrolment within 30 days of the foundation of the business environment in India in structure FC-1:

Confirmed duplicate of Charter, rules or reminder and articles of affiliation or other Instrument comprising or characterizing the constitution of the company. In case it isn’t in the English language, its confirmed interpretation ought to likewise be submitted.
An endorsement letter from the Reserve Bank of India for the setting up of business in India is to be joined. (It is obligatory to connect an authenticated duplicate of such endorsement) display
Rundown of chiefs and secretary of the Foreign Company (Mandatory). Subtleties ought to contain the present and previous name and last name, his typical private location, identity, business occupation and so on [” Director”, comparable to a Foreign Company, remembers any individual for agreement with whose headings or guidelines the Board of Directors of the company is acclimated with the act. Segment 389(b)]
Name and address or names and addresses of at least one individual/s occupant in India, approved to acknowledge administration, interaction, notice or some other archive in India for the benefit of the Foreign Company.
The Force of lawyer or board goal for the approved delegates is to be appended.
The full location of the workplace of the company in India is considered to be its chief business environment in India.
Specific of opening and shutting of a position of business in India on prior event or events; assuming any.
The revelation that none of the overseers of the company or the approved delegate in India has at any point been sentenced or suspended from an arrangement of company and the board in India or abroad;
Authenticated duplicate of endorsement of different controllers, assuming any.
Some other data as might be recommended (specifics about chiefs and secretary as determined in Rule 3 of Companies (Registration of Foreign Companies) Rules, 2014.

Relevant Registrar

Important enlistment centre for foreign companies is Registrar of Companies of NCT of Delhi and Haryana.

Digitally Signature of Form

The form will be carefully endorsed by the approved agent of the foreign company

Certification of Documents

Certifications of any charter, rule, memorandum and articles will be properly ensured as evident duplicate by legal official or official as determined in rule 9 of Companies (Registration of Foreign Companies) Rules, 2014.

Authentication of Translated Document

The deciphered report will be verified as indicated in rule 10 of Companies (Registration of Foreign Companies) Rules, 2014

After fruition of previously mentioned compliances, ROC will give Corporate Identification No. to Foreign Company.

Optional Compliance

Alterations or Changes in Information

In case there is any adjustment in underneath referenced subtleties, for example (as given beneath) a return ought to be recorded with Registrar of Companies Section 380(3). The change is needed to be recorded in form FC-2.

Memorandum, enlisted office, chief, secretary, delegate in India or chief business environment in India.
If an unfamiliar Company stops having an office in India, that reality ought to likewise be educated.

Form FC-2

Attachments into Form FC-2

A certified true copy of the Resolution.
Copy of approval letter (it is mandatory if any approval is required for such alteration).
The translated version of the documents is in English (in case the documents attached are not in English).
Particulars of alterations in the place of business in India of the company, If change.
Particulars of alteration in details of the directors or secretaries, If change.
Particulars of alterations in details of the company authorized representative, If change.

Regular Compliance

Financial Statement

Section 381 of the Companies Act, 2013 and Rule 4, 5 and 6 of Companies (Registration of Foreign Companies) Rules, 2014.

Each foreign company will, in each schedule year, Make out an asset report and benefit and misfortune account. Duplicate of asset report and P&L record ought to be documented with ROC alongside English interpretation and rundown of the business environment set up by the foreign company in India-Section 381(1) in form FC-3.

As per Rule 4(1) each foreign company will plan a fiscal report of its Indian business tasks as per Schedule III.
These ought to be submitted with the merged fiscal report of an unfamiliar Company.
If such records are not in the English language, there will be added to it an affirmed interpretation thereof in the English language.
Statement of Related gathering exchange.
Statement of Repatriation of benefits.
Statement of the move of assets (counting profits assuming any) which will, in connection of any asset move between the business environment of foreign company in India and some other related gathering of the foreign company outside India including its holding, auxiliary and partner company.

Audit of Financial Statement

Audit of Accounts of Foreign Company shall be conducted by practising Chartered Accountant (CA) or firm of Chartered Accountant- Rule-5 of Companies (Registration of Foreign Companies) Rules, 204.

Annual Return by Foreign Company

The annual return shall be submitted within 60 days of the close of the financial year in form FC-4 with fees. Rules- 7 of Companies (Registration of Foreign Companies Rules, 2014.

Purpose of the e-Form

Each foreign company will get ready and document the yearly return of the company in e-Form FC-4 within 60 days from the end of the monetary year.

Form FC-4 will be documented with the following connections:

Subtleties of Promoters, Directors and Key administrative faculty and changes in that since the close of the past monetary year. (Obligatory)
Subtleties of chiefs and key administrative workforce and their compensation. (Obligatory)
Subtleties of the gathering of the individuals or class thereof, board and its different panels alongside participation subtleties. (Obligatory).
Specifics of individuals and debenture holders alongside changes in that since the end of the past monetary year. (Obligatory).
Specifics of Holding, auxiliary and partner companies and firms. (Obligatory on the off chance that number of elements endorsed at sequential no 6 is more than seven)
Specifics of Holding, auxiliary and partner companies and firms. (Obligatory on the off chance that number of elements endorsed at sequential no 6 is more than seven)
Some other data can be given as a discretionary attachment(s).

Indicating and Displaying Details of the Company

Foreign Company ought to obviously display outside of each chief business environment in India, in English or the territorial language of the Locality its name and the country wherein it’s consolidated.
All its business letters, charge heads, sees and other authority distributions ought to show the name and nation of fuse in English.
If the obligation of individuals is restricted, it ought to be demonstrated in the plan, letterheads, billheads, sees and so on This reality ought to likewise be shown outside each office. Sec 382.

Serving of Notice of Foreign Company

Notice to Foreign Company will be considered to be adequately served whenever addressed to the individual in India whose name has been documented with ROC.
The notice might be hand conveyed or sent by post or by electronic mode. Sec 383.

Punishment For Non-Compliance

Punishment for noncompliance’s with provisions in respect of delivery of documents to ROC, return, accounts, prospectus, IDR etc. is with fine which shall not be less than Rs.1,00,000/- but can extend up to Rs.3,00,000/- and in case of continuous offence additional fine of Rs.50,000 per day.
Further, every officer of a foreign company who is in default is punishable with a fine plus imprisonment- Section 392

Certain Provisions Applicable to Foreign Companies

According to Section 384 of the Companies Act, 2013, the following arrangements are pertinent to the unfamiliar organization as are relevant to the Indian Company.

Corporate Social Responsibility (CSR)

The arrangements of CSR are pertinent to a Foreign Company having a branch office or undertaking in India in the event that it satisfies rules of ‘Net Profit’ or ‘Turnover’.

The rules of Net Profit and so on apply just to business activities in India if there should be an occurrence of an unfamiliar Company/Project Office.

Section 71:- (Debentures)

The arrangements of Sec 71 of Companies Act, 2013 will apply mutatis mutandis to an unfamiliar Company. [This area identifies with issue, recovery and so on of Debentures].

Section 92:- (Annual Return)

The arrangements of Sec 92 of Companies Act, 2013, will expose to such exemptions, alterations and variations as might be made in that rules made under this Act, apply to an unfamiliar organization as they apply to an organization consolidated in India.

Section 128:- (Books of Account)

The arrangements of Section 128 of Companies Act, 2013, will apply to an unfamiliar organization to the degree to expecting it to keep at its chief business environment in India, the books of record alluded to in that part, concerning monies got and spent deals and buys made and resources and liabilities, over the span of or comparable to its in India.

Section 77-87:- (Charge)

The arrangements of Chapter VI of the 2013 Act will apply mutatis mutandis to charges on properties that are made or gained by any unfamiliar Company. The charges are to be documented electronically in e-structure. Fulfilment of charge is to be documented in e-structure.

Section 206-229:- (Inspection, Inquiry and Investigation)

The arrangements of Chapter XIV of the 2013 Act will apply mutatis mutandis to the Indian business of an unfamiliar Company as they apply to an organization consolidated in India. The arrangements of Inspection and examination apply to unfamiliar companies too.

Limitation on Foreign Companies

Restrictions Under FEMA

A foreign company has to adhere to restrictions regarding conduction business, ownership of property etc. as prescribed by RBI under FEMA.

Fundamental Rights Available to the Citizen Not Available

Foreign Companies don’t have a fundamental right guaranteed under Article 19(1)(f) of the Constitution of India.

Summary of Share Capital, Debentures and Other Securities

• Specify subtleties for the approved, bought in and called up share capital, Indian Depository Receipts (IDRs) and debentures of the Company.

• Enter the specifics of approved Indian Depository Receipts (IDRs) any place material and furthermore, determine the number of portions of each class which are part of the way settled up for thought other than cash and furthermore enter the settled up esteem per share.

• Enter the number of offers for each class which are relinquished and furthermore determine the sum paid on such offers.

• Enter the subtleties of the shareholding example of the company toward the start and year’s end and furthermore percent change in shareholding.

• Enter the subtleties of debentures like the number, ostensible worth per debenture and the aggregate sum of debentures and furthermore for different protections exceptional toward the year’s end.

• Enter the subtleties of the people who is resident of India including any company or body corporate joined in India having at the very least 50% of the shareholding in such Foreign Company.

• It is required to enter Income charge PAN for people. The framework will consequently show the subtleties like name, father’s name, identity, date of birth and lasting location in the event that DIN is entered and the rest of the points of interest are needed to be given by the client.

• For instances of the company or body corporates, the framework will likewise naturally show the name of the company, address, email id, phone number and fax number of the company on the off chance that CIN/LLPIN is entered by the client and for different cases, the equivalent points of interest are needed to be given by the client.

• Enter the specifics of the obligation of the company for which charge has been made on the properties in India like name of the property charged and sum got by the accuse of regard to obligation toward the start of the year, charges made and fulfilled during the year and absolute obligation toward the year’s end.

Connections

• Details of Promoters, Directors and Key administrative workforce and changes in that since close of the past monetary year. (Required)

• Details of chiefs and key administrative staff and their compensation. (Compulsory)

• Details of the gathering of the individuals or class thereof, board and its different advisory groups alongside participation subtleties. (Compulsory)

• Particulars of individuals and debenture holders alongside changes in that since the end of the past monetary year. (Compulsory)

• Particulars of Holding, auxiliary and partner companies and firms. (Compulsory in the event that number of elements endorsed at sequential no 6 is more than seven)

• Details of Penalties/discipline/Compounding of offences, assuming any. (discretionary)

Fees: Rs.6,000/-

Authentication Of Translated Documents

Archives important to be documented with the Registrar of Companies by the Foreign Company should be in the English language. On the off chance that any interpretation is made out of India, it should be confirmed by the signature and the seal of the authority with the care of the first or a Notary of the nation where the company has been joined. Where such interpretation is made in India, it will be confirmed by an Advocate, lawyer or pleader qualified for seeming to confront any High Court and a sworn statement, of a capable individual having, in the assessment of the Registrar.

S. N.	Offence	Penalty
1	Non-Furnishing of return as long as 90 days after 31st December of each year.	Lower of the following: 2% of foreign contribution received during F.Y.Rs.10,000
2	Non-Furnishing of return following 3 months as long as a half year after 31st December of each year.	Lower of the following: 3% of foreign contribution received during F.Y.Rs.50,000
3	Non-Furnishing of return following a half year as long as 1 year after 31st December of each year.	Lower of the following: 4% of foreign contribution received during F.Y.Rs.2,00,000
4	Non-Furnishing of return following 1 year as long as 2 years after 31st December of each year.	Lower of the following: 5% of foreign contribution received during F.Y.Rs.5,00,000
5	Non-Furnishing of return following 2 years as long as 3 years after 31st December of each year.	Lower of the following: 10% of foreign contribution received during F.Y.Rs.10,00,000

Some Issues Which Require Clarity in New Form FC-4

Under Point No.2 (i) it is required to provide details of FC receipts both in cash and kind (esteem). Notwithstanding, no different isolation has been made for FC receipt in-kind commitment in the table given in Point No. 2. At the end of the day, the separation of the unfamiliar commitment got does exclude unfamiliar commitment gotten in kind. As we would see it, the worth of commitment got in kind ought to be incorporated at both the spots. Further, proper notes ought to be given in the evaluated budget reports in such cases. It is recommended that different revelations of ‘in kind’ commitment ought to be made in the authentication given by the Chartered Accountant.

FC forms require the attachment of certified copies of bank statements within10MB but don’t explain whether this will incorporate just assigned financial balance or it will likewise incorporate all the used ledgers. As we would see it the affirmed duplicate of the assigned ledger just is needed to be transferred.

The change in rule 17 likewise gives implication in FC-1 to commitment got in article and protections. Notwithstanding, no time limit has been given. as of now, FC-1 is likewise being utilized for the implication of receipt of presents for individual uses and this should be submitted within 30 days from the date of receipt of such commitment. Anyway no such time limit is accommodated submitting FC1 for FC commitment got in Kind and in Securities. As we would see it, the date for documenting FC-4 ought to likewise be followed for the recording of FC-1 proclamation for the reasons for documenting return towards commitment got in Kind and in Securities.

Rule17(5) actually gives that each report submitted under sub-Rule2 to 4 must be appropriately confirmed by Chartered Accountant. The report under sub-Rule 2 to 4 remembers Annual Return for Form FC-4 just as an implication to be given for unfamiliar articles and protections in FC-1. Subsequently, as the ramifications of this Rule, even FC-1 submitted for unfamiliar articles and protections will likewise be upheld by testament from CA.

Case Law

Mir Tariq Mehmood Khetran vs. Returning Officer, NA-259 and Ors.^{^[1]}

In short, the whole result except 15 polling stations of Tehsildar Pheilawagh was prepared by the Judicial Magistrate, who illegally opened the statements of the count and conveyed them to RO in violation of section 90(1B) and Section 13. The RO neither informed ECP about incomplete results nor provided a list of polling stations from which results are awaited after the passage of about 45 hours.

However, the petitioner is held at liberty to agitate his all grievances before the Election Tribunal under rule 139 of the Rules.”

Syed Ayaz Zahoor, advocate that merely because some serious allegations have been made in the election petition, it would not be proper to order a recount or Bio-metric Verification of thumb impressions of voters on the premise that no prejudice would be caused to the returned candidate. Seeking a report from NADRA would be itself constitute documentary evidence which once produced and proved in accordance with the law of evidence would give an option to a party not to give an oral account of an event or a fact on any particular issue and rely on documentary evidence only.

Shyam Sunder and Ors. vs. Ram Kumar and Ors.^{^[2]}

“What is the impact of subbed Section 15 presented by the Haryana Amendment Act, 1995 (hereinafter alluded to as the Amending Act 1995) in the parent Act for example The Punjab Pre-emption Act (hereinafter alluded to as the parent Act) as relevant to the State of Haryana whereby the right of a co-sharer to pre-empt a deal has been removed during the pendency of an allure recorded against a judgment of the High Court attesting the pronouncement passed by the preliminary Court in a seizure suit”.

Learned guidance showing up for the appellants, on the strength of the choice of this Court in Ramjilal v. Ghisa Ram (supra) and the altering Act of 1995 asked that the right of a co-sharer to pre-empt deal having been doused by subbed Section 15 of the Act, the allure is the continuation of the suit, this Court is skilful to consider the administrative changes and in that occasion, the offending party respondents suit should come up short.

To put it plainly, the perspective on the Court was that the right of pre-emption must be discovered which existed on the date of the declaration and any ensuing offer of the land in execution procedures during the pendency of the allure would not influence the practicality of the suit.

We have painstakingly investigated new subbed segment 15 acquired the parent Act by Amendment Act 1995 however don’t discover it either explicitly or by important ramifications review inactivity which might impact the right of the gatherings on the date of arbitration of suit and the equivalent is needed to be thought about by the re-appraising Court.

(accentuation provided) The choice in Ram Swarup versus Munshi (supra) was trailed by another Constitution Bench of this Court in Amir Singh and Anr.

Yet, the utilization of the words “it is announced isn’t indisputable that the Act is definitive for these words may, now and again, be utilized to present new principles of law and the Act in the last case might be correcting the law and won’t really be review.

Arbor Charitable Foundation and Ors. Vs. Union of India^{^[3]}

Issue notice to show cause as to why rule nisi not be issued, returnable on 3rd September 2021. Notice is accepted by Mr. Farman Ali, learned Sr. Panel Counsel, on behalf of the respondent. The grievance of the petitioners in the present case arises out of the peculiarities in the FC-4 Form, where under returns, regarding contributions received by beneficiaries under the Foreign Contribution Regulation Act, 2010 (“FCRA”) are required to be filed. 3479(E): MANU/HOME/0150/2020, dated 7th October, 2020, prescribed as the bank in which the FCR account is to be opened. In view thereof, till the next date of hearing, the respondent is restrained from taking any coercive action against the petitioner for failure to file the requisite return under the FC-4 Form before 30th June, 2021.

Residents can’t be punished for an error in FCRA Annual Return recommended by Govt.: Delhi High Court. The Delhi High court ruled that the citizens cannot be penalised for a discrepancy in FCRA Annual Return Form i.e. FC-4 Form, prescribed by the Government. The petitioners, Arbor Charitable Foundation, are recipients of foreign contributions in accordance with the protocol set out in the FCRA. The case arises out of the peculiarities in the FC-4 Form, where under returns, regarding contributions received by beneficiaries under the FCRA are required to be filed. To a query from the Court as to how this situation could be remedied, Mr. Farman Ali, Counsel for the respondent, seeks a short adjournment in order to enable him to obtain instructions specifically on this aspect. The court restrained the respondent authority from taking any coercive action against the petitioner for failure to file the requisite return under the FC-4 Form before 30th June, 2021 till the next date of hearing.

Conclusion

According to Rule 17 of the Foreign Contribution (Regulation) Rules, 2011, each individual who gets unfamiliar commitment under the Foreign Contribution (Regulation) Act, 2010, will present a marked or carefully marked report in electronic structure in Form FC-4 with checked duplicates of pay and consumption proclamation, receipt and instalment record and monetary record for each monetary year starting on the day of April inside nine months of the conclusion of the monetary year. The Foreign Contribution (Regulation) Act, 2010 has been corrected by the Foreign Contribution (Regulation) Amendment Act, 2020.

In this way, considering above, in the exercise of the forces presented by area 50 of the Foreign Contribution (Regulation) Act, 2010, the Central Government thusly broadens the ideal opportunity for transferring/online accommodation of yearly returns for the year 2019-20 up to 30th June, 2021.

References:

[1] (07.12.2018 – HBPK) : LEX/HBPK/0075/2018

[2] 31 July, 2001 Bench: S.P.Bharucha, V.N.Khare, Santosh N.Hegde, Y.K.Sabharwal, S.V.Patil

[3] 25 April, 2014 Bench: Dhananjaya Yeshwant Chandrachud, Chief Justice, Devendra Kumar Upadhyaya

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