Section 379- 393 of Companies Act, 2013 read with The Companies (Registration of Foreign Companies) Rules, 2014
The ambit of Foreign Company for complying to provisions has drastically increased and now even those Foreign Companies which carry business through Electronic Modes (e-commerce, etc) shall be deemed to have a place of business in India and shall be required to register in India within 30 days of establishment of its place of business in India.
The Companies Act, 2013 has added more responsibilities, accountability and documentation on the Companies incorporated outside India.
We discuss below some of the critical provisions with regard to Foreign Company:
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BROAD AREAS
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COMPANIES ACT, 2013 | COMPANIES ACT, 1956 |
| Meaning of Foreign Company | As per Section 2(42) foreign company means any company or body corporate incorporated outside India which –
· has place of business in India whether by themselves or through an agent, physically or through electronic mode · Conduct any business activity in India in any manner. |
As per section 591 Foreign Company means a body corporate incorporated outside India which has a place of business in India |
| Requisite Documents to be filed with Registrar | · Section 380 and Rule 3 provides the list of requisite information to be furnished to Registrar of Companies within 30 days from the date of establishment in Form FC-1.
· Every existing Foreign Company shall continue subject to obligation to deliver the above documents. |
· Section 592 and 593 provided specific information to be furnished to Registrar.
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| Return for alteration in documents
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· As per Section 380 and Rule 3, every Foreign Company shall file the return for alteration in Form No. FC-2 within 30 days of such alteration. | · There was no specific form mentioned earlier.
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| Filing of Annual Accounts | · As per Section 381and Rule 4, every Foreign Company shall prepare financial statement of its Indian business operations according to Schedule III.
· As per Rule 4(3) Foreign Company shall deliver copy financial statements to Registrar within six months from the close of financial year. · As per Rule 6, every Foreign Company shall file financial statements along with list of places of business in Form FC-3. |
· As per Section 594 financial statements along with consolidated accounts were required to be filed to Registrar in Form no. 52 within 9 months from closing of financial year. |
| Audit of the Accounts | · As per Rule 5 every Foreign Company shall get its accounts audited by a Practising Chartered Accountant in India or a firm or LLP of Practicing Chartered Accountant in India.
· All provisions related to audit under Chapter X shall apply to the Foreign Company |
· Earlier there was no such provision in this Act.
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| Display of Name | · As per Section 382, every Foreign Company shall exhibit outside every place of business, it’s name and country in which it is incorporated
· The above information shall also be mentioned in all official documents of the Foreign Company. |
· Section 595 stated the provisions related to display of name and country of registration in all official documents only |
| Serving of Notice | · As per Section 383 any notice or other document required to be served on Foreign Company shall be sufficiently served if addressed in the name of Person as duly intimated to ROC
· Serving of such notice or document electronically will hold validity. |
· As per section 596, there was no provision relating to service of notice electronically |
| Annual Return | · As per Section 384 and Rule 7, every Foreign Company shall prepare and file an Annual Return to Registrar in Form FC-4 within 60 days from last day of financial year. | · As per Section 600 Annual Return was to be filed in Part II of Schedule V within a period of 60 days from the last day of its financial year. |
| Penalty for Contravention | · As per Section 392 defaulting Foreign Company shall be liable to fine upto Rs. 3,00,000 and Rs. 50,000 per day in case of continuing default
· Every officer in default shall be liable to fine upto Rs. 5,00,000 or imprisonment upto six months or both |
· As per Section 598 defaulting Foreign Company and every officer in default was punishable with fine which extended to Rs. 10,000 and Rs. 1,000 per day in case of continuing default |
You may get back to us for any more details on above provisions or any other matter related to Companies Act, 2013 at below mentioned contact details-
Malavika Bhatia | <malavika.bhatia@bluelotusstrategy.com> | M +91 98733 18440
Monika Bhardwaj | <monika.bhardwaj@bluelotusstrategy.com> |M +91 98915 60525
We will do our best to assist you with the compliances and removal of doubts / queries. However, please note that since the Act is new, certain clarifications are needed as there are lot many areas where operational issues are to be sorted out.
In case of queries that require clarification from Ministry of Corporate Affairs, we will come back to you after seeking necessary clarifications from the Ministry
