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A foreign company must file its balance sheet and profit and loss account in the same form, and containing the same particulars (particularly with respect to documents relating to every subsidiary of the foreign company) exactly as it would if it had been a company within the meaning of the Companies Act (sec 594).

The Central Government may direct that these accounting requirements do not apply or apply with modification to a particular foreign company, or any class of foreign companies.

Requirements for establishment of subsidiaries

Joint Venture Company or a wholly-owned subsidiary in India of a person resident outside India A person resident outside India may establish its presence in India by either setting up Wholly-Owned Subsidiary (WOS) or Joint Venture Company (JVC) with any other Indian entity.

The foreign direct investment (FDI) in a WOS in India or a JVC in India will be subject to the exchange control regulations and the FDI policy of the Government of India. There are certain sectors/activities listed out in the exchange control regulations where automatic approval of RBI for investment is not available. In such cases, an application is required to be made to the Foreign Investment Promotion Board (FIPB)/Secretariat for Industrial Assistance (SIA) for its approval for such investment. The exchange control regulations also list out other activities where automatic approval of RBI is available for investment, subject to certain limits specified therein. Any proposed investment in excess of the limits specified therein will again require approval of FIPB/SIA. The list of industries in respect of which the automatic route of RBI is available and in respect of which approval of FIPB/SIA is required is set out in greater detail subsequently.

A subsidiary once incorporated under the provisions of the Companies Act is treated exactly like a domestic company.