Chapter 22 (Companies

Incorporated outside India) of Companies Act,

2013

Companies (Registration of

foreign Companies) Rules, 2014

FOREIGN COMPANY –DEFINITION [sec-2(42)]

Foreign Company means any company or body corporateincorporated outside India which:

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

• conducts any business activity in India in any other manner.

Electronic mode means carrying out electronically based, whether main server is installed in India or not, including, but not limited to :-• business to business /consumer transactions/ data interchange /other digital supply transactions;•offering to accept deposits or inviting deposits or accepting deposits or subscriptions in securities, in India or from citizens of India;• financial settlements, web based marketing, advisory and transactional services, database services and products, supply chainmanagement;•online services such as telemarketing, telecommuting, telemedicine, education and information research; and• all related data communication services,whether conducted by e-mail, mobile devices, social media, cloud computing, document management, voice or data transmission or otherwise;

APPLICATION OF ACT TO FOREIGN COMPANIES

FOREIGN COMPANY

In which equal to or more than 50% of the paid up share capital (whether equity or preference) is held whether singly or in the aggregate by : -one or more citizens of India

-one or more companies or bodies corporate incorporated in India

Such foreign company shall need to comply with the provisions of chapter 22 (Companies Incorporated outside India) of Companies Act, 2013

In addition of above also need to comply with the provisions of Companies Act, 2013 as may be prescribed with regard to business carried on by it in India as if it were incorporated in India

DOCUMENTS REQUIRED TO BE FILED AT THE TIME OF REGISTRATION OF FOREIGN COMPANY

Note :- Any document which any foreign company is required to deliver to Registrar shall be delivered to Registrar having jurisdiction over New Delhi and fees for registration of documents is Rs. 6000

Documents required to be filed with Registrar at the time of establishment ofplace of business in India

• Foreign company shall delivers following docs within 30 days from the date ofestablishment of place of business in India for registration with registrar in form FC-1*:-*Such application shall be supported with an attested copy of approval from Reserve Bankof India (RBI) under FEMA Act or Regulations and also from other regulators, if required.

• certified copy of the charter, statutes/ memorandum / articles of the company in Englishlanguage

• the full address of the registered or principal office

• A detailed list of the directors and secretary of the company

• the name(s) and address (s) of one or more persons resident in India

• the full address of the office in India

• particulars of opening and closing of a place of business in India on earlier occasion oroccasions;

• declaration that none of the directors of the company or the authorised representative inIndia has ever been convicted or debarred from formation of companies and managementin India or abroad; and

• Any other information as may be prescribed

OBLIGATION TO TRANSLATE DOCUMENTS BEFORE SUBMISSION

All the documents required to be filed with Registrar by foreign companiesshall be in English language & where any such document is not in Englishlanguage, there shall be attached a duly certified translation thereof inEnglish language

• The official having custody of the original, or

• A notary (public) of the country (or part of the country) where the company is incorporated

Where any such translation is made outside India, it shall be authenticated by the signature and the seal, if any, by:-

• An advocate, attorney or pleader entitled to appear before any High Court, or

• An affidavit, of a competent person having, In the opinion of the Registrar, an adequate knowledge of the language of the original and of English

Where such translation is made within India, it shall be authenticated by:-

STATUTORY COMPLIANCES FOR FOREIGN COMPANIES

Balance Sheet and Profit & Loss Account as per Schedule III of the Act

Documents to be annexed as per the provisions of Chapter IX (Accounts of Companies) of the Act, 2013

Statement of related party transactions/repatriation of profit

Statement of transfer of fund between place of business of foreign company and other related place of business of foreign company

List of places of business in form FC-3 established by the foreign company in India as on the date of balance sheet

The accounts of foreign companies are to be delivered to the Registrar within 6 months fromthe end of the financial year and it shall includes:

STATUTORY COMPLIANCES FOR FOREIGN COMPANIES (CONT.)

• If any alteration made or occurs in documents that were delivered to Registrar thecompany shall file a return of such alteration with Registrar in form FC-2 within 30 days ofsuch change or alteration

Documents required to be filed with Registrar in case of alterations in documents (sec- 380)

•Every foreign company shall display its name and country in which it is incorporated outside every office or place where it carries business.

Display of name of foreign company [sec-382]

•Every foreign company shall prepare and file an annual return in form FC-4 to registrar within 60 days from the last day of its financial year

Filing of annual return [sec-384]

•Section 71 regarding issue of debentures;

•Section 128 regarding books of accounts to be kept by the company;

•Chapter VI regarding registration of charges created by the company;

•Chapter XI regarding inspection and investigation with regards to the business carried on in India

Following provisions of the Act are applicable to foreign companies also: [sec-384]

STATUTORY COMPLIANCES FOR FOREIGN COMPANIES (CONT.)

• If any foreign company cease to have a place of business in India it shall require to file anotice of the fact to Registrar and

•as from the date on which notice is so given the obligation of the company to deliverdocuments with Registrar shall cease

Documents required to be filed with Registrar when foreign company ceases to have aplace of business in India (Rule -8)

•Every foreign company shall gets its accounts audited by a practicing chartered Accountant/firm, limited liability partnership of practicing chartered Accountant

Audit of foreign company accounts (sec-381)

•Foreign company if issuing prospectus for offering securities shall require to get it dulysigned and dated and such prospectus shall contain following matters namely :-

• the instrument constituting or defining the constitution of the company;

•The provision under which company was enacted

•address in India

• the date on which and the country in which the company would be or was incorporated;

•whether the company has established a place of business in India and, if so, the address ofits principal office in India;

•states the matters specified under section 26:

Registration of prospectus [sec-389]

PENAL PROVISIONS

If a foreign company contravenes any of the provisions of Chapter 22 then it shall be :-

• punishable with fine of not be less than Rs. 1 lakh but which may extend to Rs. 3 lakh and

• in the case of a continuing offence additional fee of Rs. 50,000 till the default continues

Every officer of the foreign company who is in default shall be

• punishable with imprisonment for a term which may extend to 6 months or with fine which shall not be less than Rs. 25,000 but which may extend to Rs. 5 lakh, or with both