Companies Act Section 379

Companies Act, Section 379: Application of the Companies Act to Foreign Companies

Section 379 of the Companies Act, 2013, outlines the applicability of the Act to companies that are incorporated outside India but operate within the Indian jurisdiction. This section clarifies which provisions of the Act extend to all foreign companies and imposes additional compliance requirements on certain foreign companies based on their shareholding structure.

Sub-section (1): General Applicability of the Act to All Foreign Companies

The provisions contained in Sections 380 to 386 (inclusive), as well as Sections 392 and 393, shall be applicable to all foreign companies operating in India, regardless of their ownership or control structure. These provisions are designed to ensure that foreign companies carrying on business in India comply with certain disclosure, registration, and regulatory requirements similar to those applicable to Indian companies.

Key Provisions Applicable:

Section 380: Obligations of foreign companies to deliver specified documents to the Registrar of Companies (RoC).
Section 381: Obligations regarding financial statements and accounts.
Section 382: Disclosure requirements for foreign companies in official publications.
Section 383: Service of documents on foreign companies.
Section 384: Debentures, annual return, registration of charges, and books of account for foreign companies.
Section 385: Fee structure for registration of documents by foreign companies.
Section 386: Interpretation of terms and clarification for application of the above sections.
Section 392: Penalty provisions for default by foreign companies.
Section 393: Provisions related to the offering of securities or prospectus by foreign companies in India.
These sections collectively ensure a minimum level of regulatory oversight over foreign entities conducting business within India.

Sub-section (2): Special Provisions for Foreign Companies with Significant Indian Ownership

Sub-section (2) of Section 379 introduces stricter compliance obligations for foreign companies that have substantial Indian ownership or control.

Specifically, this sub-section states that:

If not less than fifty percent (50%) of the paid-up share capital (whether it is in the form of equity shares, preference shares, or a combination of both) of a foreign company is held:

By one or more Indian citizens, or by one or more companies or bodies corporate incorporated in India.

Jointly by Indian citizens and Indian companies/bodies corporate (whether individually or collectively), then such a foreign company shall be required to comply not only with the provisions specifically applicable to foreign companies (as outlined in sub-section (1)), but also with:

All provisions of this Chapter (Chapter XXII: Companies Incorporated Outside India), and any other provisions of the Companies Act, 2013, as may be prescribed, in relation to the business it carries on within India.
Such a company is treated, for compliance purposes, as if it were a company incorporated in India, thereby subjecting it to a broader and more rigorous regulatory framework.