Indian Companies: Launch Your Canadian Subsidiary with CFS Canada’s Expert Guidance

As an Indian Private Limited Company, establishing a WOS in Canada requires compliance with the Foreign Exchange Management (Overseas Investment) Rules, 2022, governed by the Reserve Bank of India (RBI) under the Foreign Exchange Management Act (FEMA), 1999. The good news? In most cases, prior RBI approval is not required under the automatic route, allowing you to invest seamlessly. Here’s a detailed breakdown of RBI compliance requirements:

• Automatic Route: You can invest up to 400% of your net worth (as per the latest audited balance sheet, calculated as paid-up capital plus free reserves, minus accumulated losses) in a Canadian WOS without prior RBI approval, provided:
  • The WOS engages in a legitimate business activity, such as IT, renewables, or manufacturing (excluding restricted sectors like real estate, except construction development, or trading in Transferable Development Rights).
  • Your company is not on the RBI’s caution list, exporters’ caution list, or under investigation by agencies like the Enforcement Directorate (ED) or Central Bureau of Investigation (CBI).
  • The investment is funded through legitimate sources (e.g., internal accruals, fresh equity, or borrowings with a No Objection Certificate (NOC) from lenders, if applicable).
• Prior RBI Approval: Approval is required if:
  • The investment exceeds 400% of your net worth.
  • The WOS operates in restricted sectors like real estate (other than construction development) or financial services requiring specific regulatory clearances.
  • Your company is under investigation or has defaulted on previous ODI compliances.
  • Approval Process: Submit an application through an Authorized Dealer (AD) bank, including Form ODI Part I, a business plan, financial projections, and a valuation report (per FEMA’s arm’s length pricing rules). The RBI typically reviews applications within 30-60 days.
• Mandatory Reporting: Even under the automatic route, you must file:
  • Form ODI Part I: Within 30 days of remittance or financial commitment (e.g., equity, loan, or guarantee), submitted through an AD bank to obtain a Unique Identification Number (UIN). Required details include the Indian company’s financials, WOS incorporation details, investment amount, and a valuation report from a chartered accountant or SEBI-registered merchant banker.
  • Form ODI Part II (Annual Performance Report – APR): Within 6 months of the WOS’s financial year-end (e.g., by September 30 for a March 31 year-end), including audited financials and repatriation details.
  • Form ODI Part III: For changes in shareholding or disinvestment, filed within 30 days.
  • Form FC: For share transfers or additional financial commitments.
• Valuation Requirements: The investment must be at fair market value, supported by a valuation report to comply with FEMA’s arm’s length pricing rules.
• Penalties for Non-Compliance: Failure to file ODI forms or meet deadlines can result in penalties from INR 5,000 to INR 2 lakh or higher for continuing violations.
• Repatriation: Profits or dividends from the WOS must be repatriated to India within a reasonable period and reported in the APR.

At CFS Canada, we simplify RBI compliance, guiding you through the automatic route, securing approvals if needed, and ensuring timely, accurate filings to avoid penalties.

When registering your WOS in Canada, you have two primary options: federal incorporation under the Canada Business Corporations Act (CBCA) or provincial incorporation in a province like Ontario or British Columbia. Each offers unique advantages for Indian businesses:

• Federal Incorporation: Ideal for Indian companies planning to operate across multiple provinces, federal incorporation provides nationwide name protection and a prestigious corporate identity. The CBCA requires that at least 25% of directors be Canadian residents (or one resident director if fewer than four). If you don’t have a Canadian director, our USD 6,600 annual nominee director service, trusted by hundreds of Indian clients, ensures compliance while you retain full control of your business.
• Provincial Incorporation: Provinces like British Columbia and Ontario have no resident director requirement, offering flexibility for Indian companies focused on a single region. Extra-provincial registration may be needed if you expand to other provinces.

Our team at CFS Canada helps Indian entrepreneurs choose the right path—federal for national reach or provincial for simplicity—based on your strategic objectives.How CFS Canada Empowers Indian Businesses

At CFS Canada, we simplify the journey for Indian companies establishing a Canadian WOS with our all-inclusive USD 1,970 subsidiary registration package, designed to cover every aspect of incorporation and compliance. Our services include:

• USD 1,970 All-Inclusive Package: For just USD 1,970, we provide lifetime registered agent services, NUANS name searches, Articles of Incorporation, CRA Business Number registration, and unlimited support for the life of your Canadian registration. This comprehensive package ensures Indian businesses can set up their WOS without hidden costs.
• Nominee Director Service: For federal incorporation, our USD 6,600 annual nominee director service meets the CBCA’s residency requirement, a solution trusted by hundreds of Indian clients for its reliability and simplicity.
• RBI Compliance Expertise: We ensure seamless compliance with the Foreign Exchange Management (Overseas Investment) Rules, 2022. This includes guiding you through the automatic route (for investments up to 400% of net worth), securing RBI approvals if needed (e.g., for investments exceeding the limit or in restricted sectors like real estate), and preparing mandatory filings like Form ODI Part I (within 30 days of remittance) and Form ODI Part II (Annual Performance Report, due within 6 months of the WOS’s financial year-end). We also ensure valuation reports meet FEMA’s arm’s length pricing standards and coordinate with your Authorized Dealer (AD) bank to avoid penalties.
• Industry-Specific Support: Whether in renewables, IT, or manufacturing, we tailor our services to your sector, ensuring compliance with Canadian regulations like the Investment Canada Act (ICA) for significant investments.

With CFS Canada, Indian entrepreneurs gain a partner dedicated to their global success. The Step-by-Step Process for Indian Entrepreneurs
Our USD 1,970 all-inclusive package makes setting up your Canadian WOS simple and efficient:

1. Strategy Consultation: We assess your investment size, business goals, and preferred jurisdiction (federal or provincial).
2. RBI Compliance: We verify if your investment qualifies for the automatic route (up to 400% of net worth) or requires RBI approval. We prepare and submit Form ODI Part I within 30 days of remittance to secure the Unique Identification Number (UIN), and handle Form ODI Part II annually, including audited financials and valuation reports to comply with FEMA’s arm’s length pricing.
3. Incorporation: For federal incorporation, we conduct a NUANS name search, file Articles of Incorporation, and provide a USD 6,600 nominee director if needed. For provincial incorporation (e.g., Ontario, British Columbia), we streamline filings without residency requirements.
4. Post-Incorporation Support: We secure a CRA Business Number, handle ICA notifications, and manage extra-provincial registrations for multi-province operations.

The process takes 2-3 days for federal incorporation, with government fees included in our USD 1,970 package. Our expertise ensures compliance and efficiency for Indian businesses.