Proposed Amendments in COMPANIES (REGISTRATION OF FOREIGN COMPANIES) RULES, 2014

Companies incorporated outside India without a physical place of business in India

15.1 Companies, which are incorporated outside India and are conducting business in electronic mode only without establishing any physical presence in India would not be able to mention place of business in India. The Committee felts that in such cases, the Rules may prescribe reporting of their principal place of business from where they are managing/administering their business in India.

Closure of Liaison office/Branch Office/Project Office

15.2 The 1956 Act provided a Form- 52 for the purpose of filing application for closure of Liaison office/Branch Office/Project Office. However, no corresponding form under Chapter XXII of the Companies Act, 2013 has been prescribed. The Committee recommended that necessary rule along with the Form may be prescribed for the purpose.

Debentures, annual return, etc. and their inspection.

15.3 Section 384 provides that the provisions of Chapter VI shall apply mutatis mutandis to charges on properties, which are created or acquired by any foreign company. Form FC-4 for filing of Annual Return of foreign companies provides only about the properties in India. The Committee recommends that clarity needs to be provided that these provisions will apply only to charges on funds raised in India.

Annual Return

15.4 Section 384 (2) provides that the provisions of Section 92 shall, subject to such exceptions, modifications and adaptations as may be made therein by rules made under this Act, apply to a foreign company as they apply to a company incorporated in India. As in the case of a foreign company operating as a branch of foreign company e.g. a foreign bank, all the above details may not be available with it. Therefore, the Committee felt that disclosures required under Form FC-4 may be reviewed.

Accounts of foreign company

15.5 Section 381 read with Rule 5(2) of the Companies (Registration Of Foreign Companies) Rules, 2014 provides that the provisions of Chapter X and Rules made thereunder, as far as applicable, shall apply mutatis mutandis, to foreign companies. Chapter X contains many provisions, which may not be relevant to foreign companies. The Committee noted that the intention of section 381 and Rule 5(2) is to apply only to those provisions, which relate to the manner of conduct of audit of Indian accounts of a foreign company. Since the board and shareholders of such a company are located outside India, the applicability of the provisions of Chapter X requiring approval of such authorities would not apply. The Committee felt that the Ministry may clarify specifically the provisions of Chapter X that would be applicable in case of audit of Indian accounts of a foreign company (refer paragraphs 20.1 and 20.2 of Part I of the report).