Holding Company in Mauritius or the Netherlands? Who Files the APR, and for Which Entity

"How many APRs do we file?" A finance controller at a Bengaluru software group asked this last year, and her team had three different answers. The group holds a Mauritius company, and that company owns operating subsidiaries in Kenya, Nigeria and Egypt. Some said one APR. Some said four. One person suggested filing for Mauritius and leaving the rest to Mauritius itself.

The correct answer turns on a single idea: the APR follows the investment the Indian company actually made, not every company in the chain beneath it. Once that clicks, most of the confusion around Mauritius and Dutch holding structures goes away.

The APR Follows Your Direct Investment

The Annual Performance Report is filed through your authorised dealer (AD) bank for each foreign entity in which the Indian party has made overseas direct investment. In a holding structure, that foreign entity is the Mauritius or Dutch holdco, because that is where your money went.

The companies below it are step-down subsidiaries. Under the overseas investment framework, an entity counts as a step-down subsidiary where the foreign entity controls it. Ones the holdco merely holds a minority stake in are not treated as step-down subsidiaries and are not reported that way. So the Bengaluru group files one APR for the Mauritius company, and reports the African subsidiaries inside it.

Where Step-Down Subsidiaries Appear

Reporting the layer below does not mean filing separate APRs for each. As I read the framework, the holdco's APR carries the disclosures on its step-down companies: acquisitions, incorporations, disposals and wind-ups during the year, and changes in the shareholding pattern.

Two practical consequences follow. Your foreign subsidiary company register has to be current, because a subsidiary formed in March and never mentioned to the Indian parent will not appear in the APR. And the Indian team needs a reliable feed from the holdco's company secretary, not just its accountant. Structure changes are usually known to the secretarial function first.

Who Files When There Is More Than One Indian Investor

If two or more Indian residents invest in the same foreign entity, the one holding the larger stake files. Where holdings are equal, they file jointly or agree on a designated filer. This matters in family groups and joint ventures, where each side quietly assumes the other is handling it. Decide in writing, and record who holds the pen.

What the Filing Depends On: Audited Numbers

The audit rule is the same for holding structures as for any other overseas investment. Where the Indian investor has control, or the host country requires an audit, the APR is based on audited financial statements of the foreign entity. Where neither applies, certified unaudited statements from the Indian entity's statutory auditor may be accepted.

Holdcos are often "quiet" companies with no trading, just investments and intercompany balances. That tempts people to assume no audit is needed. If you control the entity, the assumption is wrong, however small the balance sheet. An audit of a foreign subsidiary of an Indian company is triggered by control, not by size.

One question to settle with your bank early: whether they expect the holdco's standalone statements, consolidated statements, or both. Practice varies, and the answer affects your audit scope and cost. Raise it in the first quarter of the year, not in November, because a change in scope after fieldwork begins means reopening the engagement letter and usually the timetable.

Mauritius: What to Watch

Mauritius holdcos, particularly those with global business licences, are generally subject to audit and regulatory filing requirements under local law, so the audit usually exists already. The friction is elsewhere.

• Currency. Many Mauritian entities keep their books in US dollars. Confirm the reporting currency on the accounts matches what you enter in the APR.

• Year-end. A holdco with a 30 June year-end and subsidiaries on 31 December creates mismatched periods. Fix the reporting period the bank expects before the audit starts.

• Timing. Local audit completion dates rarely line up with an Indian 31 December deadline. Build the calendar backwards from the deadline, not forwards from the local filing date.

• Substance and reports. Keep the licence, board minutes and management accounts accessible. The bank rarely asks for them, but they explain the structure if questions arise.

The Netherlands: What to Watch

The Dutch position looks different. A private company (BV) below certain size thresholds can typically claim an exemption from a statutory audit under Dutch law. That is legitimate for local purposes, and it is exactly the trap.

The reasoning matches the UK. A UK subsidiary may lawfully file unaudited accounts, yet the Indian parent's APR still requires audited figures if it controls the company, which is why groups appoint a UK auditor for APR filing. A Dutch BV works the same way. The local exemption does not cancel the RBI requirement, so the APR audit has to be commissioned specifically, usually from a registered Dutch audit firm, well before the deadline.

Other Dutch points to plan for: euro reporting, accounts that follow Dutch GAAP or IFRS, and a clear statement in the audit report of which framework was used. Ask the AD bank whether they want that framework named in a covering note.

A Side-by-Side View

Where RBI Reporting Requirements Catch People Out

Holding structures create a few repeat problems.

Missing the new step-down entity. A subsidiary formed during the year is not reported, and the APR understates the structure.

Filing for the wrong entity. Someone files for a step-down company instead of the holdco, or files for the holdco but uses an operating subsidiary's financials.

Ignoring the round-tripping check. If a step-down company invests back into India, or the chain contains more layers than the rules permit, the structure itself may be non-compliant. Check this when the structure is designed, not at APR time.

Forgetting the companion filings. The FLA return, due each July, and the original Form FC records sit alongside the APR. Inconsistencies between them raise ODI compliance questions.

A Rule of Thumb for Your Team

When a new person asks who files what, give them three sentences. One APR per direct overseas investment. The holdco's APR reports the step-down companies beneath it. The audit follows control, wherever the holdco sits.

That is enough to keep a Mauritius or Netherlands structure orderly. The remaining work is calendar discipline: confirm year-ends, appoint the local auditor early, and settle with your AD bank, before the year starts, what the filing will contain.