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Corporate and Economic Laws · Inspection, Inquiry and Investigation

Investigation of Foreign Companies under Section 228

Updated 11 October 2026 · Fact-checked

Section 228 of the Companies Act, 2013 says the provisions of the Chapter on inspection, inquiry and investigation apply mutatis mutandis to foreign companies. So the Central Government can order inspection, inquiry or investigation, including by the SFIO, into a foreign company, with changes needed to fit its nature.

Understand Investigation of Foreign Companies

A foreign company is a company incorporated outside India that has a place of business in India. It is not formed under the Indian Act, but it works in India. Fraud or mismanagement in its Indian business can hurt Indian creditors, investors and the public.

Section 228 closes this gap. It is short. It says the provisions of this Chapter apply mutatis mutandis to inspection, inquiry or investigation in relation to foreign companies. The Chapter is the one containing inspection, inquiry and investigation, including Section 212 on the Serious Fraud Investigation Office (SFIO).

Mutatis mutandis means with the necessary changes. The rules are not copied word for word. You apply them, adjusting for the fact that the company is incorporated abroad. For example, a power to examine books and records works only for what the foreign company holds or keeps in India or is bound to provide.

So the powers you must know come from the Chapter, mainly Section 212. The Central Government may, by order, assign an investigation to the SFIO on any of these grounds:

  • a report of the Registrar or inspector under section 208;
  • intimation of a special resolution passed by the company that its affairs be investigated;
  • public interest;
  • a request from a Central or State Government Department.

Once assigned, no other Central or State investigating agency can proceed with investigation of offences under the Act in that case. The Investigating Officer has the power of an inspector under section 217. The company, its officers and employees must give information, explanation, documents and assistance. Section 228 brings these into play for foreign companies, subject to the mutatis mutandis adjustment.

Key rules to remember

Section 228 rule
Chapter provisions on inspection, inquiry and investigation apply mutatis mutandis to foreign companies
Say 'mutatis mutandis' and explain it as 'with necessary changes'.
Grounds for SFIO assignment (s.212(1))
Report under s.208 | special resolution | public interest | request from a Government Department
The Central Government must first form the opinion that investigation by SFIO is necessary. It assigns by order.
Exclusivity of SFIO (s.212(2))
Once assigned, no other agency proceeds in respect of offences under the Act
Other agencies must transfer relevant documents and records to SFIO.
Duty to assist (s.212(5))
Company, officers and employees (present or past) must provide all information, explanation, documents and assistance
Applies with adjustments for a foreign company.
Arrest safeguard (s.212(10))
Produce arrested person before Special Court or Magistrate within 24 hours, excluding journey time
Arrest power under s.212(8) is for offences covered under section 447, by an officer not below Assistant Director authorised by the Central Government.

How to solve Investigation of Foreign Companies questions

Use this method for any question on investigation of a foreign company.

  1. 1Identify the entity. Confirm it is a foreign company: incorporated outside India with a place of business in India.
  2. 2State Section 228 in one line: Chapter provisions apply mutatis mutandis to inspection, inquiry or investigation of foreign companies.
  3. 3Explain mutatis mutandis briefly: apply the rules with necessary changes.
  4. 4Identify the trigger. Match the facts to a ground under Section 212(1): Registrar or inspector report, special resolution, public interest, or Government request.
  5. 5Apply the powers: assignment to SFIO by order, bar on other agencies, Investigating Officer with inspector's powers, duty to assist.
  6. 6Add the process: report to the Central Government, possible prosecution direction, and disgorgement application where fraud and undue benefit are reported.
  7. 7Conclude with a clear answer on what the Central Government can do.

Quickest way: Three-line answer

When to use it: For 2-mark MCQs or short notes when time is tight.

  1. Line 1: Section 228 applies the investigation Chapter to foreign companies, mutatis mutandis.
  2. Line 2: So Section 212 SFIO investigation can be ordered by the Central Government on the listed grounds.
  3. Line 3: The foreign company's officers and employees must assist, and other agencies step back once SFIO is assigned.

Common mistakes in Investigation of Foreign Companies

  • Saying foreign companies are fully exempt because they are incorporated abroad.

    Students link the Act only with Indian companies.

    Fix: Remember Section 228 extends the Chapter to foreign companies. Their Indian business can be investigated.

  • Treating mutatis mutandis as 'exactly the same'.

    The phrase is memorised without meaning.

    Fix: Write 'with necessary changes' and give a short example of adjustment.

  • Citing the wrong section for SFIO investigation.

    Sections 210, 212 and 213 get mixed up.

    Fix: Link SFIO with Section 212 and foreign companies with Section 228.

  • Claiming SFIO acts on its own.

    Students ignore the Central Government's role.

    Fix: The Central Government must form an opinion and assign the case to SFIO by order.

  • Missing the bar on other agencies.

    Only the grounds for assignment are revised.

    Fix: Recall s.212(2): once assigned, other agencies do not proceed for offences under the Act and transfer their records to SFIO.

Worked examples

Example 1

A company incorporated in Singapore has a liaison office and a branch in Mumbai. Allegations of fraud in its Indian operations surface. Can the Central Government have it investigated under the Companies Act, 2013? Explain.

Show the solution
  1. The company is incorporated outside India and has a place of business in India, so it is a foreign company.
  2. Section 228 applies the Chapter on inspection, inquiry and investigation to foreign companies, mutatis mutandis.
  3. Section 212 lets the Central Government assign an investigation to SFIO if it is of the opinion that it is necessary, for example in the public interest.
  4. The officers and employees must provide information, documents and assistance as the Investigating Officer requires, with the necessary adjustments for a foreign company.

Answer: Yes. By Section 228 the investigation provisions apply mutatis mutandis, so the Central Government can order an SFIO investigation into the company on a ground under Section 212(1), such as public interest.

Example 2

The Central Government assigns the investigation of a foreign company, Zenith Global Ltd, to SFIO. The State police were already investigating offences under the Act in the same matter. What is the position?

Show the solution
  1. Section 228 makes the investigation provisions applicable to foreign companies.
  2. Under Section 212(2), once a case is assigned to SFIO, no other investigating agency of the Central or a State Government proceeds with investigation of offences under the Act in that case.
  3. An investigation already begun is not proceeded with further.
  4. The agency must transfer relevant documents and records on such offences to SFIO.

Answer: The State police must stop investigating the offences under the Act and hand over the documents and records to SFIO, which conducts the investigation.

Exam tips

  • Quote Section 228 almost verbatim and always explain 'mutatis mutandis'.
  • In case questions, first prove the entity is a foreign company, then apply Section 212.
  • Do not invent extra powers. Rely on the Chapter provisions, especially Section 212.
  • For MCQs, watch for options saying foreign companies are exempt or that SFIO needs no Government order. Both are wrong.
  • Mention the four grounds under Section 212(1) when asked how an SFIO investigation begins.

Practice questions from Inspection, Inquiry and Investigation

Investigation of Foreign Companies in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Investigation of Foreign Companies: frequently asked questions

Can SFIO investigate a foreign company under the Companies Act, 2013?

Yes. Section 228 applies the investigation Chapter to foreign companies mutatis mutandis. The Central Government can therefore assign an investigation to SFIO under Section 212 on the grounds given there.

What does mutatis mutandis mean in Section 228?

It means with the necessary changes. The investigation provisions are applied to a foreign company after adjusting for the fact that it is incorporated outside India.

Who orders an SFIO investigation?

The Central Government, if it is of the opinion that investigation is necessary. It assigns the case to SFIO by order on grounds such as a Registrar or inspector report, a special resolution, public interest or a Government request.

Is Section 228 limited to SFIO investigation?

No. It covers inspection, inquiry or investigation under the Chapter. SFIO under Section 212 is the most examined part.