Environmental, Social and Governance (ESG) - Principles and Practice · Legislative Framework of Corporate Governance in India

Application of the Companies Act to Foreign Companies

Updated 11 October 2026 · Fact-checked

A foreign company is a company incorporated outside India that has a place of business in India. Sections 380 to 386 and 392 and 393 apply to all such companies. If at least 50% of its paid-up capital is held by Indian citizens or Indian bodies corporate, it must also comply as if it were an Indian company.

Understand Application of the Act to Foreign Companies

A foreign company is a body incorporated outside India. When it sets up a place of business in India, Indian law wants to know who it is, who can be sued, and what its accounts show. Chapter XXII of the Act (sections 379 to 393) does this.

Section 379(1) says sections 380 to 386 (both inclusive) and sections 392 and 393 apply to all foreign companies. These are the basic rules: registration of documents, accounts, name display and similar duties.

Section 379(2) goes further. If not less than fifty per cent of the paid-up share capital, equity or preference or partly each, is held by one or more Indian citizens, or one or more Indian companies or bodies corporate, or a mix of them, singly or together, the company must comply with the Chapter and such other provisions of the Act as may be prescribed, for its business in India, as if it were an Indian company.

The test is about paid-up capital, not voting rights or board control. It is also about the business carried on in India, not its business abroad.

The main duties are these. Under section 380, within thirty days of establishing a place of business in India, deliver documents to the Registrar: certified charter or memorandum and articles, address of the registered or principal office, list of directors and secretary, name and address of one or more persons resident in India authorised to accept service, address of the principal place of business in India, particulars of earlier openings and closings, and a declaration about convictions or debarment. Any alteration must be reported within thirty days. Under section 381, file a balance sheet and profit and loss account every calendar year, with a list of places of business in India. Under section 382, display the name and country of incorporation outside every office, and on letters, bills and notices.

Related rules: section 391 applies sections 34 to 36 to prospectuses and to Indian Depository Receipts, and applies Chapter XX on closure of the place of business where securities monies are unpaid. Section 376 allows winding up as an unregistered company. Section 234 deals with mergers between foreign and Indian companies.

Key rules to remember

Core application rule: Sections 380 to 386 and 392, 393 → apply to ALL foreign companies; Section 379(1). This applies whatever the shareholding.
Fifty per cent test: Indian holding of paid-up capital ≥ 50% → comply as if an Indian company; Section 379(2). Holders can be Indian citizens, Indian companies or bodies corporate, singly or in aggregate. Equity and preference capital both count.
Filing on setting up: Documents to Registrar within 30 days of establishing a place of business in India; Section 380(1). Alterations: return within 30 days (section 380(3)).
Annual accounts: Balance sheet + profit and loss account every calendar year + list of places of business; Section 381. A non-English document needs a certified English translation. The Central Government may exempt or modify by notification.
Name display: Name + country of incorporation; limited liability notice if members' liability is limited; Section 382. Outside every office in English and local language; in English on letters, bills, notices and publications.
Merger with an Indian company: Foreign company may merge into or with an Indian company with prior RBI approval; Section 234(2). Consideration may be cash, Depository Receipts, or both.

How to solve Application of the Act to Foreign Companies questions

Use this order for any case question on foreign companies. Always tie each conclusion to a provision.

1Check if the entity is incorporated outside India and has a place of business in India. If so, it is a foreign company.
2State that sections 380 to 386 and 392, 393 apply to it under section 379(1).
3Check the shareholding. Compute Indian citizens' and Indian bodies corporate's share of paid-up capital, equity plus preference.
4If the total is 50% or more, state that section 379(2) applies and the company must comply as if Indian, for its Indian business.
5Identify the duty tested: documents (380), accounts (381), name display (382), prospectus or IDR (391), merger (234), winding up (376).
6Apply the facts: dates, the 30-day limit, missing items, the language of documents.
7Conclude clearly, and add the practical step, for example filing the return or displaying the name.

Quickest way: Two-gate check

When to use it: Use when a question gives shareholding figures and asks what law applies.

Gate 1: foreign incorporation plus a place of business in India? If yes, sections 380 to 386, 392, 393 apply.
Gate 2: Indian holding of paid-up capital at least 50%? If yes, add the Indian-company treatment under section 379(2).
Match the duty to the section and the 30-day or calendar-year deadline.
Write the conclusion in one line.

Common mistakes in Application of the Act to Foreign Companies

Applying the 50% test to voting rights or control.
Students link it to subsidiary or control tests.
Fix: The test is paid-up share capital, equity or preference or both.
Saying the Chapter applies only when Indians hold 50% or more.
Section 379(2) is remembered more than section 379(1).
Fix: Sections 380 to 386 and 392, 393 apply to all foreign companies. The 50% test adds the Indian-company treatment.
Treating a company incorporated abroad with no place of business in India as covered by the filing duties.
Students ignore the trigger of a place of business.
Fix: Section 380 is triggered by establishing a place of business in India. Note section 234 defines foreign company differently for mergers, regardless of a place of business.
Forgetting the 30-day limit for alterations.
Students remember only the initial filing.
Fix: Section 380(3) requires a return within thirty days of any alteration.
Confusing the annual accounts duty with an Indian company's AGM-based filing.
Both involve balance sheets.
Fix: Section 381 requires accounts in every calendar year, with a list of places of business in India.
Missing the local-language requirement for name display.
Students recall only English.
Fix: Outside offices, the name must be in English and in a language generally used locally (section 382(a)).

Worked examples

Example 1

Zenith Holdings Inc., incorporated in Singapore, opens a liaison office in Pune on 1 March. It has equity capital only, 30% held by Indian citizens and 15% by an Indian company. State its obligations under the Companies Act, 2013.

Show the solution

Zenith is incorporated outside India and has a place of business in India. It is a foreign company.
Under section 379(1), sections 380 to 386 and 392, 393 apply.
Indian holding is 30% + 15% = 45%, which is below 50%. Section 379(2) does not apply, so it is not treated as an Indian company.
Under section 380, it must deliver the prescribed documents to the Registrar within thirty days of 1 March, including the certified charter, addresses, list of directors and secretary, and an authorised person resident in India.
It must file accounts every calendar year with a list of places of business (section 381), and display its name and country of incorporation (section 382).

Answer: Zenith is a foreign company bound by sections 380 to 386, 392 and 393, but not by the Indian-company treatment, as Indian holding is 45%.

Example 2

Meridian Ltd, incorporated in Mauritius, carries on business in Mumbai. Its paid-up capital is 40% equity and 60% preference. Indian citizens hold 20% of the equity and Indian companies hold 40% of the preference. Is section 379(2) attracted?

Show the solution

Meridian is a foreign company with a place of business in India. Section 379(1) applies.
Take the total paid-up capital as 100. Equity is 40 and preference is 60.
Indian citizens hold 20% of 40 = 8.
Indian companies hold 40% of 60 = 24.
Aggregate Indian holding = 8 + 24 = 32, i.e. 32% of total paid-up capital.
32% is below 50%, so section 379(2) is not attracted.

Answer: No. Indian holding is 32% of paid-up capital, below the 50% threshold, though sections 380 to 386, 392 and 393 still apply.

Exam tips

Always cite section 379(1) and 379(2) separately. Examiners reward the distinction.
In shareholding problems, combine equity and preference capital before computing the percentage.
List the section 380 documents by category and mention the 30-day deadline.
Link to related sections such as 376 (winding up), 391 and 234 for extra marks, but only where the facts call for them.

Practice questions from Legislative Framework of Corporate Governance in India

Application of the Act to 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.

Application of the Act to Foreign Companies: frequently asked questions

What is a foreign company under the Companies Act, 2013?

It is a company or body corporate incorporated outside India that has a place of business in India, for the purposes of Chapter XXII. For mergers under section 234, the Explanation defines it as any company incorporated outside India, whether or not it has a place of business in India.

What does section 379 say?

Section 379(1) applies sections 380 to 386 and 392 and 393 to all foreign companies. Section 379(2) says that where at least 50% of paid-up capital is held by Indian citizens or Indian companies or bodies corporate, the company must comply as if it were an Indian company, for its Indian business.

Within what time must a foreign company file documents in India?

Within thirty days of establishing a place of business in India under section 380(1). Any alteration must be filed in a return within thirty days under section 380(3).

Do foreign companies have to file financial statements in India?

Yes. Section 381 requires a balance sheet and profit and loss account in every calendar year, delivered to the Registrar along with a list of places of business in India. The Central Government may exempt or modify this by notification.