Foreign Subsidiary Compliance & Cross-Border Advisory

Cross-Border Corporate Compliance & FEMA Advisory

Establishing and managing a foreign subsidiary in India requires navigating corporate law, FEMA regulations, and RBI compliance rules. Transactions between an Indian subsidiary and its foreign parent organization are subject to strict transfer pricing rules and reporting requirements. We provide cross-border corporate compliance advisory services to help international organizations operate smoothly in India.

Our FEMA and corporate law team advises overseas parent companies on Foreign Direct Investment (FDI) guidelines, repatriation of profits, and mandatory reporting, ensuring compliance with local regulatory authorities.

FDI Reporting & RBI FIRMS Portal Filings

All inbound foreign equity investments must be reported to the Reserve Bank of India (RBI) through the Foreign Investment Reporting and Management System (FIRMS) portal:

• Form FC-GPR (Foreign Collaboration-General Permission Route): This form must be filed within 30 days of issuing share capital to foreign entities, supported by valuation certificates issued by a Chartered Accountant.
• Form FC-TRS (Transfer of Shares): Used to report transfer of equity shares between a resident and a non-resident of India, filed within 60 days of the transfer or payment receipt.
• Annual FLA Return (Foreign Liabilities and Assets): Every Indian company that has received FDI or holds assets overseas must file the FLA return directly with the RBI by July 15 every year. This return reports the company's financial positions and market valuations.

Transfer Pricing Audits u/s 92E

Transactions between the Indian subsidiary and the foreign associated enterprise must be conducted at Arm's Length Price (ALP) to prevent tax base erosion:

1. Form 3CEB Certification: We conduct audits of international transactions (such as raw material imports, management service fees, or intellectual property royalties) and issue Form 3CEB reports.
2. Transfer Pricing Documentation: Preparing detailed benchmarking studies, selecting testing methodologies (such as the Transactional Net Margin Method - TNMM), and identifying comparable companies using approved databases.
3. Safe Harbour Rules & APAs: Advising clients on adopting safe harbour guidelines or entering into Advance Pricing Agreements (APAs) to manage transfer pricing litigation risks.

External Commercial Borrowings (ECB)

When the Indian subsidiary raises debt funding from its foreign parent or overseas lenders, it must comply with ECB guidelines:

• Obtaining a Loan Registration Number (LRN) from the RBI before drawing down funds.
• Filing monthly ECB-2 returns to report loan utilization, interest accruals, and principal repayments.
• Adhering to All-in-Cost ceilings and average maturity period guidelines issued by the RBI.