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Introduction: Under the Indian Companies Act, a “Foreign Company” refers to any company or body corporate incorporated outside India having a place of business in India and conducts business activities in any manner. However, companies registered under the Indian Companies Act shall not be fall under the ambit of foreign companies.

The article delves into the provisions of Sections 379 to 393 of the Companies Act, 2013, which specifically deal with foreign companies. It explains that foreign companies establishing a place of business in India must comply with various requirements, such as submitting certified documents, details of directors and authorized representatives, and more.

Furthermore, the article highlights Section 376, which allows foreign companies ceasing business in India to be wound up as unregistered companies. It also discusses the applicability of certain sections, including debentures, annual returns, corporate social responsibility, and inspection procedures to foreign companies.

What is Foreign Company?

The Law related to Companies in India provides the definition of the Foreign Company under clause 42 of section 2.

“Foreign Company” means any company or body corporate which is incorporated outside India and which –

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

> Conducts any business activity in India in any other manner.

Therefore any company registered under Indian Companies Act  can not be known as foreign company.

What are the provisions related to Foreign Company under Companies Act, 2013?

Provisions of Sections 379 to 393 under Chapter XXII of the Companies Act, 2013 deal with foreign companies.

Pursuant to the provisions of Section 380 every foreign company which establishes a place of business in India must, within 30 days of the establishment of such place of business, file with the Registrar of Companies for registration:

(i) a certified copy of the charter, statutes or memorandum and articles, of the company or other instrument constituting or defining the constitution of the company and, if the instrument is not in the English language, a certified translation thereof in the English language;

(ii) the full address of the registered or principal office of the company;

(iii) a list of the directors and secretary of the company containing such particulars as may be prescribed;

(iv) the name and address or the names and addresses of one or more persons resident in India authorised to accept on behalf of the company service of process and any notices or other documents required to be served on the company;

(v) the full address of the office of the company in India which is deemed to be its principal place of business in India;

(vi) particulars of opening and closing of a place of business in India on earlier occasion or occasions;

(vii) declaration that none of the directors of the company or the authorised representative in India has ever been convicted or debarred from formation of companies and management in India or abroad; and

(viii) Any other information as may be prescribed. Every foreign company has to ensure that the name of the company, the country of incorporation, the fact of limited liability of members is exhibited in the specified places or documents as required under Section 382 of the Act.

Provisions of Section 376 of the Companies Act, 2013 further provides that when a foreign company, which has been carrying on business in India, ceases to carry on such business in India, it may be wound up as an unregistered company under Sections 375 to 378 of the Act, even though the company has been dissolved or ceased to exist under the laws of the country in which it was incorporated.

Section 379 provides that where not less than 50% of the paid-up share capital, whether equity or preference or partly equity and partly preference of a foreign company is held by one or more citizens of India or by one or more bodies corporate incorporated in India, whether singly or in the aggregate, such company shall comply with such of the provisions of this Act, as may be prescribed by the Central Government with regard to the business carried on by it in India, as if it were a company incorporated in India.

Section 381 requires a Foreign Company to maintain books of Account and file a copy of balance sheet and profit and loss account in prescribed form with ROC every calendar year.

These accounts should be accompanied by list of places of business established by the foreign company in India as at the date with reference to which the balance sheet is made out.

As regards the applicability of the provisions of the Companies Act, 2013 to foreign companies, the following provisions of section 384 are to be noted:

(i) The provisions of section 71 relating to Debentures shall apply mutatis mutandis to a foreign company.

(ii) The provisions of Section 92 regarding (filing of annual returns) and Section 135 (Corporate Social Responsibility) shall, subject to such exceptions, modifications or adaptations as may be made therein by the rules made under the Act, apply to a foreign company as they apply to a company incorporated in India.

(iii) The provisions of Section 128 shall apply to a foreign company to the extent of requiring it to maintain at its principal place of business in India books of account with respect to moneys received and spent, sales and purchase made and assets and liabilities, in the course of or in relation to its business in India.

(iv) The provisions of Chapter VI (Registration of Charges) shall apply mutatis mutandis to charges on properties which are created or acquired by any foreign company.

(v) The provisions of Chapter XIV (Inspection, Inquiry and Investigation) shall apply mutatis mutandis to the Indian business of a foreign company as they apply to a company incorporated in India.

Conclusion: Understanding the concept of foreign companies in India is essential for both foreign corporations seeking to operate in the country and Indian authorities regulating such businesses. Compliance with the relevant provisions under Indian Company Law is crucial for foreign companies to operate smoothly and legally within the Indian market.

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