An ordinary company treats a related-party transaction as an exception to document carefully. A GCC’s core revenue model is a related-party transaction — almost everything it bills goes to its own parent — which means the documentation discipline around it has to be constant, not occasional.
The compliance calendar underneath it
A minimum of four board meetings a year, with the India-resident director attending in person or by video as required under the Companies Act, an Annual General Meeting, and the associated ROC filings — Form AOC-4 for financial statements and Form MGT-7 for the annual return — form the baseline calendar. Statutory registers and minute books need to be maintained on that same calendar, not reconstructed retroactively at year-end when an auditor asks for them.
Section 188 is not an edge case for a captive centre
Section 188 of the Companies Act, 2013 requires board approval, and in some cases a special resolution, for related-party contracts or arrangements above prescribed thresholds, along with disclosure in the financial statements through Form AOC-2. For most companies this provision governs the occasional related-party deal. For a GCC, where substantially all revenue is parent-billing, Section 188 is not a control for an unusual transaction — it is the primary control governing the entity’s core business, and needs to be treated that way from the first year of operation rather than discovered at the first statutory audit.
Where the numbers have to match
The board-approved related-party transaction terms, the disclosure in the financial statements, and the transfer-pricing cost-plus markup covered on our Tax & Transfer Pricing page all need to tell the same consistent number to survive both a Companies Act audit and an income-tax transfer-pricing audit. It is the inconsistency between these three records, not the existence of the related-party relationship itself, that draws scrutiny in practice.
The true-up, mechanically
Once operational, a GCC typically reports into its parent on a monthly or quarterly MIS pack covering actual cost against budget and headcount. That reporting cycle is also where the cost-plus transfer-pricing true-up happens: actual costs incurred are reconciled against the agreed markup, and the difference is invoiced to keep the year’s effective margin consistent with the position taken in the transfer-pricing documentation. This is the point where a GCC’s finance function stops being a setup project and becomes a managed operation, which is what our Managed Services practice is built to run.
This article is general information, not tax or legal advice for your situation. Speak with a qualified adviser before acting.