REGISTRATION OF FOREIGN COMPANIES
The Companies (Central Government’s) General Rules and Forms 1956 (Rule 20) prescribes a fixed fee of INR 5,000 to be paid for the registration of documents by a foreign company.
A foreign company must file its balance sheet and profit and loss account in the same form, and containing the same particulars (particularly with respect to documents relating to every subsidiary of the foreign company) exactly as it would if it had been a company within the meaning of the Companies Act (sec 594).
The Central Government may direct that these accounting requirements do not apply or apply with modification to a particular foreign company, or any class of foreign companies.
A foreign company having a place of business in India is required, within 30 days of the establishment of a place of business in India, to deliver to the Registrar the names of the persons in India authorized to accept service of process on the company and the full address of the office of the company in India.
Documents to be filed
A foreign company which establishes a place of business in India is statutorily obliged to deliver the following documents to the Registrar at the time of registration:
- A certified copy of the charter, memorandum an articles, or other instrument defining the constitution of the company and if the instrument is not in English language a certified translation thereof;
- Full address of the registered, or principal, office of the company;
- List of particulars of its directors and secretary;
- Particulars of persons resident in India authorized to accept service of documents on behalf of the company; and
- Full address of the company’s principal place of business in India.
Any alteration to the aforesaid particulars furnished to the Registrar shall be communicated to him by filing a return in the prescribed form.
Registration of charges executed outside India
Foreign companies must register, with the Registrar, the particulars and the instrument of all charges on property, wherever situate (Companies Act, sec 127 and 600). The fees for registration vary from time to time and are set out in Sch X of the companies Act.
Bodies with jurisdiction
The statutory bodies, which mainly exercise jurisdiction over foreign companies, are:
- The Central Excise Department;
- The Commercial Taxes Department;
- The Income Tax Department;
- The Reserve Bank of India;
- The Department of Industries; and
- The Registrar of Companies.
Liquidation of a foreign company
A foreign company may be wound up as an unregistered company, only by NCLT/court, not Voluntarily or under the supervision of the court.
When a foreign company ceases to carry on business in India, it may be wound up in India as an unregistered company even though the foreign company has been dissolved or otherwise ceased to exist under the laws under which it was incorporated. A foreign company may be wound up if:
- The foreign company is dissolved, or has ceased to carry on business, or is carrying on business only for the purpose of winding up its affairs;
- The foreign company is unable to pay its debts; and
- NCLT is of the opinion that it is just and equitable that the foreign company should be wound up.
A company is deemed to be unable to pay its debts when:
- A creditor, to whom the foreign company is indebted in a sum exceeding INR 100,000 then due, has served on the foreign company a demand in writing, and the foreign company has, for three weeks after such demand, failed to pay the sum or to secure or compound for it to the satisfaction of the creditor;
- Execution or other process issued on a decree or order of any court or NCLT in favour of a creditor against the foreign company (or any member thereof as such) is returned unsatisfied in whole or in part; or
- It is otherwise proved to the satisfaction of NCLT that the foreign company is unable to pay its debts.
Requirements for establishment of subsidiaries
Joint venture company or a wholly-owned subsidiary in India of a person resident outside India
A person resident outside India may establish its presence in India by either setting up wholly-owned subsidiary (WOS) or joint venture company (JVC) with any other Indian entity.
The foreign direct investment (FDI) in a WOS in India or a JVC in India will be subject to the exchange control regulations and the FDI policy of the Government of India. There are certain sectors/activities listed out in the exchange control regulations where automatic approval of RBI for investment is not available. In such cases, an application is required to be made to the Foreign Investment Promotion Board (FIPB)/Secretariat for Industrial Assistance (SIA) for its approval for such investment. The exchange control regulations also list out other activities where automatic approval of RBI is available for investment, subject to certain limits specified therein. Any proposed investment in excess of the limits specified therein will again require approval of FIPB/SIA. The list of industries in respect of which the automatic route of RBI is available and in respect of which approval of FIPB/SIA is required is set out in greater detail subsequently.
A subsidiary once incorporated under the provisions of the Companies Act is treated exactly like a domestic company.
Fees and duties
A WOS or JVC in India will be required to pay the same registration fees as any other company in India. The fees vary according to the amount of the nominal share capital of the company. The fees vary according to the amount of the nominal share capital of the company. The table of fees is set out in Sch X of the Companies Act.
Companies which increase share capital after registration must pay a fee when submitting notice of the increase to the Registrar. The fee in this case is the difference between that payabl