Comprehensive compliance audit across Companies Act, FEMA, transfer pricing, employment law, data privacy, environmental and sector specific regulations for foreign multinationals with India subsidiaries, branches or operations.
Short, direct, on the record.
A comprehensive audit should cover Companies Act (ROC, governance), FEMA (FDI, ECB, reporting), Income Tax (TP, withholding, PE risk), GST, employment laws (EPF, ESI, POSH, gratuity), DPDPA, environmental laws, competition law, sector specific regulations and any industry specific legislation. The scope depends on the subsidiary activities, sector and employee strength.
Annual comprehensive compliance audits are recommended as a minimum. Quarterly reviews of critical compliance areas (FEMA, tax, employment) are advisable. Trigger based audits should be conducted after significant events such as change in business model, acquisitions, new regulatory requirements or regulatory investigations.
Consequences range from monetary penalties (INR 100 per day for ROC delays, up to INR 250 crore under DPDPA) to criminal prosecution of directors (Companies Act fraud, environmental violations), director disqualification (Section 164(2) for non filing), FEMA compounding proceedings and regulatory sanctions. Persistent non compliance can lead to company strike off proceedings.
Generally, the subsidiary is a separate legal entity and the parent is not directly liable. However, if the corporate veil is pierced (fraud, improper conduct, alter ego), parent liability can arise. Directors nominated by the parent may face personal liability as officers in default. FEMA violations can have implications for the parent foreign investment approval status.
Share the entity type, sector, employee strength and the compliance areas of concern for a preliminary assessment.