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Foreign Company under Companies Act 2013 - All provisions.

Foreign Company under Companies Act 2013 - All provisions.

New Act has widened the coverage for the foreign companies.This article will focus on provisions for Foreign companies as per Companies Act 2013.


What is meant by foreign company?


Definition of foreign company as per Companies Act 1956.


It required the presence of the business in India. Following conditions were to be satisfied. Such company was liable for compliance under Companies Act 1956.


- Company should have been incorporated outside India.


- It should have place of business in India.

Definition of foreign company as per Companies Act 2013.


It has widened the scope of liability for the foreign companies.Now foreign company is defined as below.


- Company or body corporate incorporated outside India.


- Such entity has place of business in India.


- Such place of business has physical presence or through electronic mode.


- Such place is obtained by itself or agent.


- Such entity carries out business operations in India.


Impact of change in definition.


- Companies Act 2013 will cover body corporate also.This has broadened the scope of foreign company



- Earlier the Act stressed on physical presence in India.However Companies Act 2013 states that electronic presence is enough for the purpose.


Electronic mode for place of business


There is no definition of electronic mode in the Act.Electronic mode refers use of digital platform.However it can’t be restricted to only one activity.Electronic mode business can be described as below.


- B2B and B2C digital transactions.


- Online services like telemarketing, telecommuting etc.


- Online marketing services.


- Data communication services etc.


Place of business.


Earlier provisions covered a very few foreign companies.This gave an escape plan to the existing foreign companies.Such companies managed to stay away from registration in India. Non registration was exploited in the form of avoidance of compliances.

However , Companies Act 2013 , now considers digital business within India as place of business within India.Such activity can be regarded for permanent place of business.A single transaction in India through digital platform would suffice .The location of server will not be considered in such cases.This amendment will impact a large class of foreign businesses such as Amazon etc.

The amended Act also prescribes compliances for the foreign company.These provisions are discussed in next part.


Compliances under Companies Act 2013 for foreign companies.


- Documents to be submitted to ROC.


The foreign company shall submit the list of documents to ROC.Such documents are to be submitted within 30 days of registration.


List of documents to be submitted-


a. Certified copy of constitution or articles of association.


b. Address of registered office.


c. List of directors with their complete details.


d. Details and address of the authorized person who would receive the notice on behalf of company.


e. Declaration that none of the directors are disqualified to be appointed etc.


- Financial statements of the foreign company.


The foreign company shall prepare financial statements.It shall submit the copies to ROC.Financial statements include profit and loss and balance sheet.


- Display of name etc. of foreign company.


The foreign company is required to display name and country of incorporation.Such details are to be mentioned in all business related communication.Also, the company will mention limited if the company is publicly traded.


- Communication with the company.


Any notice or any other communication to be sent to authorized person.Such person shall receive the documents etc. on behalf of the company.Such communication can also be forwarded through electronic mode.


- Applicability of existing provisions.


The existing provisions with respect to following will be applicable to foreign company.Any additional requirements are also mentioned.


a. Provisions with respect to debentures.


b. Provisions of Annual return.

Such company shall submit annual return in Form FC.4.


c. Provisions relating to Books of Accounts.


d. Provisions for Registration of Charges.


The foreign company shall register the charges on property,However location of such property is not considered.The property may be located in or outside of India.


e. Provision with respect to inspection.


f. Provisions with respect to issue of prospectus.


Documents required to be attached to the prospectus by foreign company are as follows.


i. Expert’s consent


ii. Material contracts details which are not entered in normal course of business etc.


g. Provision with respect to IDR issued by the foreign company.


h. Provision with respect to winding up of the company.


The foreign company shall be wound up as an unregistered company.




Most of the provisions of Companies Act 1956 are applicable to foreign company.However Companies Act 2013 also presents some additional provisions.The new Act has resulted in extending the scope for Foreign company.This will affect a large number of foreign businesses operating in India.


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