Foreign Company Compliance Under Companies Act 2013

Definition of Foreign Company:

♦ As per definition given under Section 2 (42) of the Companies Act, 2013;

“foreign company” means any company or body corporate incorporated outside India which,—

(a) has a place of business in India whether by itself or through an agent, physically or through electronic mode; and

(b) conducts any business activity in India in any other manner. 

Overview of Some Important Provisions related to Foreign Company’s under the Companies Act, 2013:

Sl. No.	Provisions(s)	Particulars of the Provision(s)
1	Section 2(42)	Definition of Foreign Company
2	Section 33	Issue of Application Forms for Securities
3	Section 34	Criminal Liability for Mis-statements in Prospectus
4	Section 35	Civil Liability for Mis-statements in Prospectus
5	Section 36	Punishment for Fraudulently Inducing Persons to Invest Money
6	Section 40	Securities to be Dealt with in Stock Exchanges
7	Section 41	Global Depository Receipt
8	Section 71	Debentures
9	Section 88	Register of Members, etc.
10	Section 92	Annual Return
11	Section 128	Books of Account, etc., to be kept by Company
12	Section 134	Financial Statement, Board’s Report, etc
13	Section 228	Investigation, etc., of Foreign Companies
14	Section 234	Merger or Amalgamation of Company with Foreign Company
15	Section 376	Power to Wind Up Foreign Companies, Although Dissolved
16	Section 379	Application of Act to Foreign Companies.
17	Section 380	Documents, etc., to be Delivered to Registrar by Foreign Companies
18	Section 381	Accounts of Foreign Company
19	Section 382	Display of Name, etc., of Foreign Company.
20	Section 383	Service on Foreign Company
21	Section 384	Debentures, Annual Return, Registration of Charges, Books of Account and Their Inspection
22	Section 385	Fee for Registration of Documents
23	Section 386	Interpretation (Certified, Director and place of business)
24	Section 388	Provisions as to Expert’s Consent and Allotment
25	Section 389	Registration of Prospectus
26	Section 391	Application of Sections 34 to 36 and Chapter XX
27	Section 392	Punishment for Contravention
28	Section 393	Company’s Failure to Comply with Provisions of This Chapter Not to Affect Validity of Contracts, etc.
29	Section 405	Power of Central Government to Direct Companies to Furnish Information or Statistics.
30	Section 447	CHAPTER XXIX MISCELLANEOUS Punishment for Fraud.
31	Section 592	Documents, Etc., To Be Delivered To Registrar By Foreign Companies Carrying On Business In India
32	Chapter VI	Registration of Charges
33	Chapter XIV	Inspection Inquiry and Investigations
34	Section 196 & 197 Schedule V	Conditions To Be Fulfilled For The Appointment Of A Managing Or Whole-Time Director Or A Manager Without The Approval Of The Central Government Appointments

♦  Sections 380 to 386 (both inclusive) and sections 392 and 393 shall apply to all foreign companies, Provided that the Central Government may, by Order published in the Official Gazette, exempt any class of foreign companies, specified in the Order, from any of the provisions of sections 380 to 386 and sections 392 and 393 and a copy of every such Order shall, as soon as may be after it is made, be laid before both Houses of Parliament.

Analysis of ROC forms specifically for foreign company:

(Ministry of Corporate Affairs / Registrar of Companies)

1. eForm FC-1 (Information to be filed by foreign company)

♦ Law(s) and Regulations:

Section 380(1) (a) to (h) and Rule 3(3) of the Companies (Registration of Foreign Companies) Rules, 2014

♦ Filing requirements:

A foreign company shall file the particulars of the principal place of business in e-form FC-1 within 30 days of establishment of place of business in India alongwith the required documents to RoC, Delhi.

The Registrar of the corresponding state shall have access to these documents filed with the RoC, Delhi.

♦ Stamp Duty Payment:

> Stamp duty on eForm FC-1 can be paid electronically through the MCA portal.

> Payment of stamp duty electronically through MCA portal is mandatory in respect of the states which have authorized the Central Government to collect stamp duty on their behalf.

> Now eStamp duty payment is to be done online through MCA portal for all the states.

♦ Mandatory Attachment(s)

√ Certified copy of the charter, statutes, or memorandum and articles of the company or other instrument constituting or defining the constitution of the company (Mandatory).

√ List of directors and secretary of the foreign company (Mandatory).

√ Power of attorney or board resolution in favor of the authorized representative(s) (Mandatory).

√ Reserve bank of India approval letter (It is mandatory to attach attested copy of such approval).

◊ Details of other places of business in India (if any)

√ It is mandatory to enter the date of closure of such place of business and also FCRN of such office

◊ Particulars of place(s) of business in India established on any earlier occasion(s) other than above (if any)

√ Maximum seven of such offices can be entered. If more than seven then details can be given in necessary attachment(s).

2. eForm FC-2 (Return of alteration in the documents filed for registration by foreign company)

♦ Law(s) and Regulations:

Section 380(3) of the Companies Act, 2013 and Rule 3(4) of the Companies (Registration of Foreign Companies) Rules, 2014

♦ Filing requirements:

Every foreign company on alterations in the charter or statute or any other instrument governing the company, alterations in the particulars of Director/Secretaries of the foreign company , any change in the registered or principal office of the company in the country of incorporation, any change in the particulars of authorized representative(s) of the company and any change in other places of business in India of the company, has to file eform FC-2 within 30 days of the alterations made.

This eForm is required to be filed with Registrar of Companies and a copy is routed to concerned RoC of the respective state by the system. An alert is generated at the concerned RoC to inform of the filing done at RoC, Delhi.

♦ Mandatory Attachment(s)

Copy of approval letter (it is mandatory if any approval is required for such alteration).

3. eForm FC-3 (Annual accounts along with the list of all principal places of business in India established by foreign company)

♦ Law(s) and Regulations:

Section 381 of the Companies Act, 2013 and Rule 4, 5 and 6 of Companies (Registration of Foreign Companies) Rules, 2014

♦ Filing requirements:

Every foreign company is required to prepare and file financial statements within a period of six months of the close of the financial year of the foreign company to which the financial statements relate to Delhi RoC in eForm number FC-3. It shall also prepare and file a list of places of business in India established by a foreign company as on date of the balance sheet in the same form.

However, the Registrar can extend the said period to not more than three months on application made in writing.

♦ Mandatory Attachment(s)

√ Copy of latest consolidated financial statement of parent company (Mandatory).

√ Copy of balance sheet and profit and loss account duly authenticated under section 381(1) (Mandatory)

√ In case the document is in any other language other than English, certified translation in English language is mandatory

4. eForm FC-4 (Annual Return of a Foreign Company)

♦ Law(s) and Regulations:

Section 384(2) of the Companies Act 2013 and Rule 7 of Companies (Registration of Foreign Companies) Rules, 2014

♦ Filing requirements:

Every foreign company shall prepare and file annual return of the company in eForm FC-4 within 60 days from the close of financial year.

♦ Mandatory Attachment(s)

√ Details of Promoters, Directors and Key managerial personnel and changes therein since close of previous financial year. (Mandatory)

√ Details of directors and key managerial personnel and their remuneration. (Mandatory)

√ Details of the meeting of the members or class thereof, board and its various committees along with attendance details. (Mandatory)

√ Particulars of members and debenture holders along with changes therein since the close of previous financial year. (Mandatory)

√ Particulars of Holding, subsidiary and associate companies and firms. (Mandatory in case number of entities prescribed at serial no 6 is more than seven)