Section 2(42) of the Companies Act, 2013 deals with the provisions relating to foreign companies. As per section 2(42), a foreign company means any body corporate incorporated outside India but also includes a place of business in India whether itself or through any electronic means or an agent and also conducts any endeavour in the other manner in India.

The meaning of the word ‘place of business has been judicially construed. The simplest test is to determine whether the business is carried on here and at an outlined place.

In an English case A.S. Dampskib ‘Hercules’ v. Grand Trunk Pacific Railway Co. (1912), a Canadian railway company’s four directors were in England who formed a London Committee to raise loans for the construction of the railway in Canada. They were using the office of another company without paying any rent and transacted only the business of raising loans and none other. The court of appeal held that the defendants were carrying on their business in the office used by the London Committee and this was sufficient to give jurisdiction to the English courts.

Section 386 of the Act provides that the expression place of business includes a registration office or share transfer.

Section 379(1) of the Act lays down that sections 380 to 386 and sections 392 and 393 of Chapter XXII of the Companies Act, 2013 shall apply to all foreign companies. It further states that the central government may exempt any class of foreign companies, from any of the provisions of sections 380 to 386 and sections 392 and 393.

The following are the provisions of the Companies Act, 2013 regarding foreign companies:

• Documents to be delivered by foreign companies: Section 380 of the Act provides that a foreign company within 30 days of its establishment in India shall deliver to the Registrar the following documents for registration-   

           A certified copy of the instrument defining the constitution of a company like the charter, statutes, or memorandum and articles, or any other instrument, and if the instrument is not in the English language then a certified translation thereof.

           The full address of the principal registered office of the company.

           The list of the board of directors and a secretary of the company with such particulars as may be prescribed.

           The full address of the office in India which is deemed to be the principal place of business in India etc.

Any alteration in the above shall be notified to Registrar within 30 days of such alteration.

• Accounts of a foreign company: Every foreign company shall prepare in every calendar year a balance sheet and profit and loss account in such form as prescribed and deliver a copy thereof to the Registrar.
• Display of name, etc of the foreign company: The name of the company and the country in which it is incorporated should be displayed outside every office in India in English and the local language used in the locality in which the office is situated.
• Service on a foreign company: Service on documents on the foreign company can also be served through electronic mode.
• Punishment: Section 392 provides that if a foreign company contravenes the provisions of the Act applicable on it then it shall be punishable with fine, not less than 1lakh rupees but which may extend to 3lakh rupees and in case of continuing offence additional fine which may extend to 50000 rupees for every day during the default continues. Every officer of the company shall be punishable with imprisonment which may extend to 6 months or with fine not less than 5000 rupees but which may extend to 5lakh rupees or with both.

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