Prepare the subsidiary attachments separately
The fourth proviso to section 137(1) of the Companies Act, 2013 requires the company to attach accounts of subsidiaries incorporated outside India which have not established a place of business in India, along with its financial statements filed with the Registrar. The following proviso permits the holding Indian company to file unaudited financial statements with a declaration where the foreign subsidiary is not required by any law of its incorporation country to obtain an audit and does not obtain one. Non-English statements under that route also need an English translated copy.
Read the applicable text: ICSI Companies Act text: section 137 Official Companies (Amendment) Act, 2017: insertion of the foreign-subsidiary proviso.
Both unaudited-route conditions matter
Record the incorporation country, applicable local audit requirement and actual audit status. An audit that is inconvenient, late or expensive is not the same as an audit not required by local law. A subsidiary that voluntarily obtains an audit does not fit the condition that it does not get the statement audited. Do not make a blanket group declaration without examining each subsidiary.
Build the legal-entity and period matrix
Identify the holding company, subsidiary, incorporation, Indian-place-of-business facts and relevant financial-statement period. Reconcile this population to the group structure and consolidation file. The attachment obligation should not disappear merely because the parent has consolidated numbers. Conversely, do not extend this particular fourth-proviso conclusion automatically to every foreign investment or associate without analysing the applicable provisions.
Keep the declaration evidenced
Retain the local-law basis and responsible confirmations supporting the absence of a mandatory audit and actual audit status. The declaration should describe the facts to which it relates and identify the relevant subsidiary and statements. This guide does not invent a statutory declaration form, a specific signatory category or a certification requirement absent a separately verified basis.
Translate the statements faithfully
Where the unaudited-route statements are not in English, preserve the original and the English translated copy together. Reconcile statement titles, dates, notes, currencies, units, comparative columns and material qualifications. Translation is not currency conversion: do not silently convert amounts to INR or rewrite accounting policies to make the document look like the parent’s accounts.
Distinguish attachments from the filing calendar
Section 137 also governs the company’s financial-statement filing events. This article focuses on attachment readiness; it does not assume that waiting for a foreign audit or translation extends the parent’s statutory filing date. Keep adoption, filing-form selection and any applicable relaxation in a separate verified calendar. Before submission, confirm that the actual uploaded package contains the approved originals, translations and declarations, rather than only an internal checklist.
Six worked illustrations
All facts and amounts are fictional. Calculations illustrate the stated assumptions, not a predetermined legal outcome.
Illustrative example 1: Scope the attachment population
A group inventory contains seven foreign subsidiaries. Five meet the assumed fourth-proviso facts; two have established places of business in India. The specific fourth-proviso population is five, with the other two flagged for separate applicable-provision analysis. Do not treat this classification as a conclusion that no accounts concerning the other two are ever required.
Illustrative example 2: Test the unaudited route individually
Of five in-scope subsidiaries, three are not legally required to audit and have not audited, one must audit locally and one has voluntarily audited. Only three meet both stated unaudited-route conditions. The remaining two cannot be placed in that route merely because all five are foreign subsidiaries.
Illustrative example 3: Count complete translated packages
Three eligible unaudited subsidiaries each have one original statement set and one declaration. Two original sets are non-English and need English copies under the proviso. The inventory is three original sets, three declarations and two translated sets: eight document sets for this fictional packaging plan. Counting eight files does not itself establish their contents are complete.
Illustrative example 4: Find a missing translated note
An original statement set has 28 pages, including six pages of notes. Its English copy has 26 corresponding pages and omits two note pages. The two-page gap requires resolution. Page counts are only a screening control: different layout pagination could also require a section-by-section comparison rather than an assumption of error.
Illustrative example 5: Translation is not INR conversion
The original and translated copies should both preserve an amount of EUR 120,000 where translation alone is performed. An optional separate reconciliation using an explicitly assumed ₹90 per EUR would show ₹1,08,00,000. That calculation is not a substitute for an English translation and the assumed rate is not asserted as a prescribed filing rate.
Illustrative example 6: Reconcile dispatch against approval
The approved package has twelve identified attachments. The actual upload includes ten of them and one unrelated duplicate, producing eleven files. Two approved attachments are missing despite a net count difference of one. Match document identities and versions, not only totals.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Identify the subsidiary population | Group structure and legal-entity register. |
| 2 | Verify incorporation and India presence | Fourth-proviso facts for each entity. |
| 3 | Confirm relevant statement periods | Subsidiary accounts and consolidation bridge. |
| 4 | Check local audit requirement | Supported incorporation-country legal position. |
| 5 | Check whether audit actually occurred | Final statements and auditor-status evidence. |
| 6 | Select the supported route | Entity-specific audited/unaudited conclusion. |
| 7 | Prepare the declaration where applicable | Identified statements and supporting facts. |
| 8 | Translate non-English statements under the route | Original and complete English copy. |
| 9 | Reconcile content and versions | Notes, currencies, units and comparative columns. |
| 10 | Verify actual filing package | Uploaded attachments, acknowledgement and retained copies. |
Sixteen practitioner FAQs
1. Does consolidation automatically replace subsidiary attachments?
Do not assume so. The fourth proviso imposes a separate attachment requirement.
2. Which foreign subsidiaries are specified there?
Those incorporated outside India which have not established a place of business in India.
3. Does this decide every associate’s filing treatment?
No. Analyse other entities under their applicable provisions.
4. Are all foreign subsidiaries eligible for unaudited filing?
No. The stated legal-audit and actual-audit conditions must both be satisfied.
5. Does a late mandatory audit satisfy the exemption?
An audit delay is not absence of a legal audit requirement.
6. What if the subsidiary voluntarily audited?
It does not meet the condition that it does not get the statement audited.
7. Is a declaration required for the unaudited route?
Yes. File it with the unaudited financial statement under the proviso.
8. Can the group make an unsupported blanket declaration?
Use entity-specific evidence and identify the statements covered.
9. When is an English copy required under this route?
Where the relevant financial statement is in a language other than English.
10. May the original be discarded after translation?
Preserve the original with the translated copy and the filed package.
11. Is translation the same as currency conversion?
No. Preserve the original currencies and units.
12. Does the example prescribe an exchange rate?
No. Its rate is an explicit optional-reconciliation assumption.
13. Do equal page counts prove accurate translation?
No. Reconcile content, notes and periods.
14. Does waiting for translation automatically extend the parent’s filing date?
No such extension follows merely from the attachment task.
15. Does this guide prescribe a new declaration form?
No. Verify actual filing requirements without inventing a form.
16. What proves the attachment task is complete?
A content and version reconciliation of the actual submitted package.
Official sources
ICSI Companies Act text: section 137 Official Companies (Amendment) Act, 2017: insertion of the foreign-subsidiary proviso