BIG RELIEF TO INDIAN COMPANIES WITH OVERSEAS SUBSIDIARIES

MINISTRY ALLOWS FILING OF ‘UNAUDITED’ ACCOUNTS OF FOREIGN SUBSIDIARIES WITH REGISTRAR OF COMPANIES

The Ministry of Corporate Affairs (“MCA”) has relaxed the norms requiring Indian companies with overseas subsidiaries to file ‘audited’ financial statements of such foreign subsidiaries with the Registrar of Companies (“RoC”) in India. This is after consulting with The Institute of Chartered Accountants of India ("ICAI"), the Ministry has clarified that even ‘unaudited’ financial statements of foreign subsidiaries can be filed with the RoC and will be treated as due compliance of Indian company law.

This exemption will be allowed in case of a foreign subsidiary which is not required to get its financial statements audited as per legal requirements prevalent in the country of its incorporation, and which does not get its financial statements audited. Moreover, Ministry has also clarified that format of financial statements of foreign subsidiaries should be, as far as possible, in accordance with the Companies Act 2013 (No. 18 of 2013) and should need to be translated in English, if the original accounts are not in English. In case this is not possible, a statement indicating the reasons for deviation may be placed/ filed along with such financial statements. 

Further, the Ministry has also clarified that a company holding a general meeting after giving a shorter notice (as provided under Section 101 of Companies Act, 2013) may also circulate financial statements (to be laid/considered in the same general meeting) at such shorter notice.

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