Key One-time Compliance Post Incorporation
Once a Wholly Owned Subsidiary (WOS) is set up in India by a foreign entity and the Certificate of Incorporation (COI) is received, certain one-time compliance requirements must be fulfilled. These initial compliances are essential for the smooth commencement of business operations per Indian regulatory norms.
Key One-time Compliance Post Incorporation
1. Receipt of Subscription Money
The shareholders need to remit the subscription money into the company’s bank account. This step is not only essential for business commencement but also forms the basis for further filings with regulatory authorities.
2. Filing of Form INC-20A – Declaration of Commencement of Business
As per Section 10A of the Companies Act, 2013, every company having share capital must file Form INC-20A within 180 days from the date of incorporation.
The form confirms that the company has received the subscription amount.
3. Issuance of Share Certificates
Under Section 56 of the Companies Act, 2013, share certificates must be issued to the subscribers within 2 months from the date of incorporation.
4. Filing of Form FC-GPR with RBI
As per FEMA read with FEM (Non-Debt Instruments) Rules, 2019, a company needs to report the receipt of foreign investment to the Reserve Bank of India by filing Form FC-GPR.
The form must be filed within 30 days from the date of share allotment.
5. Appointment of First Auditor (Form ADT-1)
The company’s Board of Directors needs to appoint its first statutory auditor within 30 days from the date of incorporation. Where the appointment is not made by the Board of Directors within 30 days, the members of the company shall appoint the auditor within 90 days in their meeting.
6. Declaration of Beneficial Ownership – Forms MGT-4, MGT-5, and MGT-6
In a Wholly Owned Subsidiary (WOS) structure, the nominee shareholder also holds certain shares on behalf of the foreign parent company. Legally, this creates a distinction between the registered owner and the beneficial owner, requiring compliance under Section 89 of the Companies Act, 2013.
Form MGT-4 & MGT-5
- Form MGT-4: To be submitted by the nominee shareholder to the company declaring that they are not the beneficial owner of the shares. This form needs to be filed within 30 days from the date on which the name of such nominee shareholder is entered in the register of members of the company.
- Form MGT-5: To be submitted by the foreign parent company declaring itself as the beneficial owner of the shares. This form must be submitted to the company within 30 days of acquiring such beneficial interest.
Form MGT-6
- The company (WOS) must file Form MGT-6 with the Registrar of Companies (ROC) within 30 days of receiving MGT-4 and MGT-5, disclosing the beneficial interest declarations.
7. Significant Beneficial Ownership Disclosures – Forms BEN-1 and BEN-2
Under Section 90 of the Companies Act, 2013, read with the Companies (Significant Beneficial Owners) Rules, 2018, every Indian company is required to identify and report its Significant Beneficial Owners (SBOs), that is, individuals who ultimately hold or control ownership, even if indirectly.
In the case of a Wholly Owned Subsidiary (WOS) in India, the Indian subsidiary is obligated to trace the ownership of the foreign parent up to the level of a natural person who qualifies as the SBO.
BEN-1 (to be filed by the individual SBO)
Any such individual (SBO) must furnish a declaration in Form BEN-1 to the Indian subsidiary within 30 days of acquiring status as SBO.
BEN-2 (to be filed by the Indian WOS)
Upon receipt of BEN-1, the Indian subsidiary is required to file Form BEN-2 with the Registrar of Companies (ROC) within 30 days.
Optional Registrations Based on Business Model & Prescribed Thresholds
Depending on the nature, threshold, and/or location of the business, some additional registrations may be applicable:
- GST Registration: If the company expects turnover to exceed the prescribed limit or plans to engage in inter-state trade
- Shops and Establishment Registration: Mandatory under state-specific laws for setting up any commercial establishment
- Professional Tax Registration: Applicable in certain states
- Import Export Code (IEC): Required for businesses involved in import/export
Post-Incorporation Compliance Checklist
| Compliance | Timeline | Authority |
| Receive Subscription Money | Within 180 days of incorporation | – |
| File INC-20A | Within 180 days of incorporation | MCA |
| Issue Share Certificates | Within 2 months of the date of incorporation | – |
| File FC-GPR | Within 30 days of share allotment | RBI |
| File ADT-1 | Within 30 days of incorporation | MCA |
| Submit Form MGT-4 | Within 30 days of the entry of the name of the nominee shareholder in the Register of Members of the Company | – |
| Submit Form MGT-5 | Within 30 days of acquiring beneficial interest in the shares of the Company | – |
| File Form MGT-6 | Within 30 days of receipt of Form MGT-4, MGT-5 | MCA |
| BEN – 1 | Within 30 days of acquiring status as SBO | – |
| BEN – 2 | With 30 days of receipt of the declaration in BEN-1 | MCA |
Conclusion
Establishing a Wholly Owned Subsidiary in India is only the first step in setting up operations. Completing the post-incorporation compliances in a timely and accurate manner is essential for building a compliant and credible business foundation. These initial filings and declarations reflect the company’s commitment to Indian regulatory standards and ensure a smooth transition into active business operations. Foreign parent entities are advised to approach this phase with careful planning and expert support to avoid future regulatory complications.
At CorpNinja Advisors, we specialize in helping foreign companies establish and maintain compliant operations in India. From incorporation to post-setup support, we manage your legal and regulatory journey end-to-end.
📩 Reach out to us at hello@corpninjaadvisors.com for tailored support.
Disclaimer: This article is for general information purpose only and does not constitute any advice. Please get in touch with your consultant before taking any step(s). We shall not be responsible for any loss incurred due to step(s) taken basis the information shared in this article.