What you have to file before you can trade

Your certificate of incorporation does not let you trade. A company incorporated in India on or after 2 November 2018 has to file INC-20A before it can legally do business, and eight other obligations run on their own clocks from the day the certificate is issued.

Several of these clocks start the moment the MCA approves your incorporation, so time has already been running while you waited for the certificate to reach your inbox.

What happens at the first board meeting?

Almost everything in this section is authorised at it. Until the board meets, nobody has formal authority to act in the company's name, so one short meeting appoints the first auditor, approves opening the bank account, authorises the issue of share certificates, and gives your directors the authority to sign filings.

Nobody flies anywhere. Board meetings can be held over video conference, and for a two-director subsidiary the first one is a short, well-scripted affair. The notice, agenda, resolutions and minutes are prepared in advance; your directors review and sign.

It also starts a permanent rhythm. The board has to meet at least four times a year with no more than 120 days between meetings, for as long as the company exists.

Why does an auditor have to be appointed in the first month?

Because India requires a statutory audit from the first financial year, whatever the revenue. The Companies Act, 2013 requires the board to appoint an independent Chartered Accountant as the first statutory auditor, and ADT-1 notifies the MCA within 15 working days of the meeting that made the appointment.

The first auditor holds the position until the conclusion of your first annual general meeting, at which point the appointment is formally reviewed and confirmed.

What are share certificates and why is stamp duty involved?

A share certificate is the document proving ownership of shares in the company. It is the title deed for the parent's stake in the Indian entity.

Share certificates are not filed with any government authority. They are internal company records that the company and its shareholders maintain, and banks, auditors and regulators ask to see them at various points.

• They can only be issued after capital infusion is complete. The money has to be in the account before the certificates can be prepared.
• They are due within 60 days of incorporation, which is why the bank account and the capital transfer are urgent rather than merely important.
• Stamp duty is payable on every certificate under the Indian Stamp Act. A certificate is only legally valid once the duty has been paid, and the stamp paper has to be procured before issue.

What is dematerialisation and can a small subsidiary skip it?

No. A wholly owned subsidiary has to dematerialise all of its shares under Rule 9B of the Companies (Prospectus and Allotment of Securities) Rules, 2014, from the date of allotment. The small-company exemption does not apply.

Dematerialisation converts paper share certificates into electronic holdings. Think of it as a bank account for shares. The company first obtains an ISIN, a unique identifier in the depository system, then the shares are credited to each shareholder's demat account.

1. The company appoints a Registrar and Transfer Agent.
2. An ISIN is obtained from NSDL or CDSL.
3. Each shareholder, including the foreign parent, opens a demat account.
4. The shares are credited electronically and the paper certificates are retired.

Dematerialisation creates a recurring obligation of its own. PAS-6 is a half-yearly reconciliation of share capital, certified by a practising company secretary or chartered accountant, filed within 60 days of each half-year end. In practice that lands around 30 May for the October to March half and 29 November for April to September. It confirms that the company's issued capital matches what the depository records show, and it continues for as long as the company does.

What can the company not do before INC-20A is filed?

Trade, in any form. Section 10A of the Companies Act, 2013, inserted by the Companies Amendment Ordinance, 2018, imposes hard restrictions on every company until the declaration is filed. These are statutory prohibitions rather than grey areas.

Two things go into the filing: proof that the shareholders have transferred the subscribed amount into the company's account, with the date and amount, and photographs of the registered office.

How do you report the foreign investment to the RBI?

Through FC-GPR on the RBI's FIRMS portal, within 30 days of allotting the shares. FC-GPR stands for Foreign Currency Gross Provisional Return, and it reports the issue of shares against the foreign money received.

The clock runs from the allotment, not from the day the money landed. Those two dates get conflated because they are usually days apart, and the rule that keeps them close is a separate one: shares have to be allotted within 60 days of receiving the consideration. Miss that and the money has to be refunded.

The process runs in four steps, three of which are one-time registrations.

1. Entity User registration on the FIRMS portal.
2. EMF, the Entity Master Form, which registers the Indian entity in the RBI's system.
3. BU registration, which registers the Business User who will file on the entity's behalf.
4. The FC-GPR filing itself.

Documents the RBI asks for

• The Foreign Inward Remittance Certificate, issued by your bank on receipt of the funds.
• A KYC of the remitter, also from the bank.
• The board resolution allotting the shares.
• The share certificates issued to the foreign shareholder.
• A valuation certificate confirming the fair value of the shares, from a Chartered Accountant.
• A declaration that the company complies with FEMA.

Every communication from the RBI goes to the email address of the Authorised Representative, usually one of the directors. Forward those to whoever is handling the filing the day they arrive. The RBI asking for an additional document is routine, and it only becomes a problem when the email sits unread.

The filings that come after FC-GPR

The FLA return is the one companies forget. It is the annual sibling of FC-GPR, due to the RBI by 15 July each year based on the financial year ended 31 March. Unaudited figures are acceptable, with a revised filing after the audit closes. Missing it puts the company in FEMA contravention even when everything else is clean.

What does the annual cycle look like once this is done?

Four board meetings a year, an annual general meeting by 30 September, and a set of filings that follow it.

Tax, GST and transfer pricing run on their own calendars alongside these. Those are in tax and GST and transfer pricing.