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CS Executive · Setting Up of Business, Industrial and Labour Laws · Setting up of Branch Office, Liaison Office and Wholly Owned Subsidiary by Foreign Company

Vega Ltd, a UK company, runs a branch office in India and has also formed an Indian wholly owned subsidiary. The board of Vega's Indian subsidiary asks which statement on books of account is correct under the Companies Act, 2013. Which one is correct?

A company with a branch office in India or outside India is deemed to comply with the books-keeping requirement if proper books for branch transactions are kept at the branch and summarised returns are sent periodically to the registered office or the other permitted place.

  1. AA company with a branch in India or outside India is deemed to comply if proper books for branch transactions are kept at the branch and periodic summarised returns reach the registered officeCorrect
  2. BBooks of account for branches must always be physically kept at the registered office only
  3. CBooks of account must be preserved for at least three financial years
  4. DInspection of a subsidiary's books by a director of the holding company can be done by any director without any board authorisation

Explanation

The Act deems a company with a branch in India or outside India to comply with its books-keeping duty if proper branch books are kept at the branch and summarised returns are periodically sent to the registered office or other permitted place. The retention period is not less than eight financial years, so option C is wrong. Inspection of a subsidiary's books requires a person authorised by a Board resolution, so option D is wrong.

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