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TMI BlogChapter XXII- The Companies (Registration of Foreign Companies) Rules, 2014.X X X X Extracts X X X X X X X X Extracts X X X X ..... force on the date 1st day of April 2014. 2. Definitions. (1) In these rules, unless the context otherwise requires,- (a) "Act" means the Companies Act, 2013 (18 of 2013); (b) "Annexure" means the Annexure enclosed to these rules; (c) For the purposes of clause (42) of section 2 of the Act, "electronic mode" means carrying out electronically based, whether main server is installed in India or not, including, but not limited to - (i) business to business and business to consumer transactions, data interchange and other digital supply transactions; (ii) offering to accept deposits or inviting deposits or accepting deposits or subscriptions in securities, in India or from citizens of India; (iii) financial settlements, web based marketing, advisory and transactional services, database services and products, supply chain management; (iv) online services such as telemarketing, telecommuting, telemedicine, education and information research; and (v) all related data communication services, whether conducted by e-mail, mobile devices, social media, cloud computing, document management, voice or data transmission or otherwise; (d) "fees" means the fees as specified in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all also be supported with an attested copy of approval from the Reserve Bank of India under Foreign Exchange Management Act or Regulations, and also from other regulators, if any, approval is required by such foreign company to establish a place of business in India or a declaration from the authorised representative of such foreign company that no such approval is required. (4) Where any alteration is made or occurs in the document delivered to the Registrar for registration under sub-section (1) of section 380, the foreign company shall file with the Registrar, a return in Form FC-2 along with the fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 containing the particulars of the alteration, within a period of thirty days from the date on which the alteration was made or occurred. 4. Financial Statement of foreign company.- (1) Every foreign company shall prepare financial statement of its Indian business operations in accordance with Schedule III or as near thereto as may be possible for each financial year including- (i) documents required to be annexed thereto in accordance with the provisions of Chapter IX of the Act i.e. Accounts of Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any) which shall, in relation of any fund transfer between place of business of foreign company in India and any other related party of the foreign company outside India including its holding, subsidiary and associate company, include- (i) date of such transfer; (ii) amount of fund transferred or received; (iii) mode of receipt or transfer of fund; (iv) purpose of such receipt or transfer; and (v) approval of Reserve Bank of India or any other authority, if any. (3) The documents referred to in this rule shall be delivered to the Registrar within a period of six months of the close of the financial year of the foreign company to which the documents relate: Provided that the Registrar may, for any special reason, and on application made in writing by the foreign company concerned, extend the said period by a period not exceeding three months. 5. Audit of accounts of foreign company.- (1) Every foreign company shall get its accounts, pertaining to the Indian business operations prepared in accordance with the requirements of clause (a) of sub-section (1) of section 381 and rule 4, audited by a practicing Chartered Accountant in India or a firm or limited liability part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid shall be certified as a true copy by- (i) an official of the Government to whose custody the original is situated; or (ii) a Notary (Public) of such Country; or (iii) an officer of the company. (b) The signature or seal of the official referred to in sub-clause (i) of clause (a) or the certificate of the Notary (Public) referred to in sub-clause (ii) of clause (a) shall be authenticated by a diplomatic or consular officer empowered in this behalf under section 3 of the Diplomatic and Consular Officers (Oaths and fees) Act, 1948 (XL of 1948), or where there is no such officer, by any of the officials mentioned in section 6 of the Commissioners of Oath Act, 1889 (52 and 53 Vic. C. 10), or in any relevant Act for the said purpose. (c) The certificate of the officer of the company referred to in sub-clause (iii) of clause (a) shall be signed before a person having authority to administer an oath as provided under section 3 of the Diplomatic and Consular Officers (Oath and Fees) Act, 1948 (XL of 1948), or as the case may be, by section 3 of the Commissioners of Oath Act, 1889 (52 and 53 Vic, C. 10) and the status of the person administering the oath in the latter case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be authenticated by a diplomatic or consular officer empowered in this behalf under section 3 of the Diplomatic and Consular Officers (Oaths and Fees) Act, 1948, or, where there is no such officer, by any of the officials mentioned in section 6, of the Commissioners of Oaths Act, 1889 (52 and 53 Vic C 10), or in any relevant Act for the said purpose. (3) Where such translation is made within India, it shall be authenticated by- (a) an advocate, attorney or pleader entitled to appear before any High Court; or (b) 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. 11. Documents to be annexed to prospectus.- The following documents shall be annexed to the prospectus, namely:- (a) any consent to the issue of the prospectus required from any person as an expert; (b) a copy of contracts for appointment of managing director or manager and in case of a contract not reduced into writing, a memorandum giving full particulars thereof; (c) a copy of any other material contracts, not entered in the ordinary course of business, but entered within preceding two years; (d) a copy of u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r making an issue of IDRs: (a) the issuing company shall, where required, obtain the necessary approvals or exemptions from the appropriate authorities from the country of its incorporation under the relevant laws relating to issue of capital and IDRs. (b) issuing company shall obtain prior written approval from the Securities and Exchange Board of India on an application made in this behalf for issue of IDRs along with the issue size. (c) an application under clause (b) shall be made to the Securities and Exchange Board of India (along with draft prospectus) at least ninety days prior to the opening date of the IDRs issue, in such form , along with such fee and furnishing such information as may be specified by the Securities and Exchange Board of India from time to time: Provided that the issuing company shall also file with the Securities and Exchange Board of India, through a Merchant Banker, a due diligence report along with the application under clause (b) in the form specified by the Securities and Exchange Board of India. (d) the Securities and Exchange Board of India may, within a period of thirty days of receipt of an application under clause (c), call for such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermission from one or more stock exchanges having nationwide trading terminals in India. Explanation- For the purposes of this rule,- (i) "Domestic Depository" means custodian of securities registered with the Securities and Exchange Board of India and authorized by the issuing company to issue IDRs. (ii) "Merchant Banker" means a Merchant Banker as defined in sub-regulation (cb) of regulation 2 of the Securities and Exchange Board (Merchant Bankers) Regulations, 1992. (iii) "Overseas Custodian Bank" means a banking company which is established in a country outside India and which acts as custodian for the equity shares of Issuing Company, against which IDRs are proposed to be issued by having a custodial arrangement or agreement with the Domestic Depository or by establishing a place of business in India. (4) The Merchant Banker to the issue of IDRs shall deliver for registration the following documents or information to the Securities and Exchange Board of India and Registrar of Companies at New Delhi, namely:- (a) instrument constituting or defining the constitution of the issuing company; (b) the enactments or provisions having the force of law by or unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt for fraudulently inducing persons to invest money in IDRs. (e) The person(s) responsible for issue of the prospectus shall not incur any liability by reason of any non-compliance with or contravention of any provision of this rule, if- (i) as regards any matter not disclosed, he proves that he had no knowledge thereof; or (ii) the contravention arose in respect of such matters which in the opinion of the Central Government or the Securities and Exchange Board of India were not material. (6) (a) A holder of IDRs may transfer the IDRs, may ask the Domestic Depository to redeem them or any person may seek reissuance of IDRs by conversion of underlying equity shares, subject to the provisions of the Foreign Exchange Management Act, 1999, the Securities and Exchange Board of India Act, 1992, or the rules, regulations or guidelines issued under these Acts, or any other law for the time being in force; (b) In case of redemption, Domestic Depository shall request the Overseas Custodian Bank to get the corresponding underlying equity shares released in favour of the holder of IDRs for being sold directly on behalf of holder of IDRs, or being transferred in the books of Issuing c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ications are made or proposed to be made for listing of the IDRs; (iv) the provisions relating to punishment for fictitious applications; (v) statement or declaration for refund of excess subscription; (vi) declaration about issue of allotment letters or certificates or IDRs within the stipulated period; (vii) date of opening of issue; (viii) date of closing of issue; (ix) date of earliest closing of the issue; (x) declaration by the Merchant Banker with regard to adequacy of resources of underwriters to discharge their respective obligations, in case of being required to do so; (xi) a statement by the Issuing company that all moneys received out of issue of IDRs shall be transferred to a separate domestic bank account, name and address of the bank and the nature and number of the account to which the amount shall be credited; (xii) the details of proposed utilisation of the proceeds of the IDR issue. (b) Capital Structure of the Company- The authorized, issued, subscribed and paid-up capital of the issuing company; (c) Terms of the issue- (i) rights of the IDR holders against the underlying securities; (ii) details of availability of prospectus and forms, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding on a date which is less than 180 days prior to the date of opening of the issue, if the gap between the ending date of the latest audited financial statements disclosed under clause (A) and the date of the opening of the issue is more than 180 days: Provided that if the gap between such date of latest audited financial statements and the date of opening of issue is 180 days or less, the requirement under item (B) shall be deemed to be complied with, if a statement, as may be specified by the Securities and Exchange Board of India, in respect of material changes in the financial position of Issuing company for such gap is disclosed in the Prospectus: Provided further that in case of an Issuing company which is a foreign bank incorporated outside India and which is regulated by a member of the Bank for International Settlements or a member of the International Organization of Securities Commissions which is a signatory to a Multilateral Memorandum of Understanding, the requirement under this paragraph, in respect of period beginning with last date of period for which the latest audited financial statements are made and the date of opening of the issue shall be satisfied, if ..... 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