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

Winding Up of Foreign Companies under Section 376

Updated 11 October 2026 · Fact-checked

Under Section 376 of the Companies Act, 2013, a body corporate incorporated outside India that has carried on business in India and has ceased to do so may be wound up as an unregistered company. This holds even if it has been dissolved in its home country. You answer by applying Section 376 with Section 375.

Understand Winding Up of Foreign Companies

A foreign company is a body corporate incorporated outside India that does business in India. It is not registered under the Companies Act, 2013 as an Indian company. So the Act treats it as an unregistered company for winding up.

Section 376 solves a specific problem. A foreign company may stop business in India and may even be dissolved in the country where it was incorporated. Indian creditors, employees or others may still have claims here. Without a special rule, the company could argue that it no longer exists and cannot be wound up.

The section says that where a body corporate incorporated outside India, which has been carrying on business in India, ceases to carry on business in India, it may be wound up as an unregistered company under this Part. This applies notwithstanding that the body corporate has been dissolved or has otherwise ceased to exist under the laws of its home country.

Section 376 only gives the power. The procedure and grounds come from Section 375. Under Section 375, an unregistered company cannot be wound up voluntarily. It can be wound up if it is dissolved, has ceased to carry on business, or carries on business only to wind up its affairs. It can also be wound up if it is unable to pay its debts, or if the Tribunal thinks it just and equitable. All the winding-up provisions of the Act apply, with the exceptions in Section 375.

Remember one related point. Section 391(2) says that, subject to Section 376, Chapter XX applies mutatis mutandis to closing the place of business of a foreign company in India. This applies where it has raised money through securities under that Chapter that have not been repaid or redeemed.

Key rules to remember

Section 376 rule: Foreign body corporate + carried on business in India + ceased to carry on business in India ⇒ may be wound up as an unregistered company; Dissolution or ceasing to exist in the home country is no bar to winding up in India.
Voluntary winding up bar: Unregistered company ⇒ no voluntary winding up (Section 375(2)); Only winding up by the Tribunal is available.
Grounds for winding up an unregistered company: Dissolved / ceased business / business only to wind up affairs; unable to pay debts; just and equitable (Section 375(3)); Three grounds. Apply them to the facts.
Deemed inability to pay debts: creditor demand: Debt due > ₹1,00,000 + written demand served + 3 weeks of non-payment, non-securing or non-compounding; Section 375(4)(a). The amount must exceed one lakh rupees and be then due.
Deemed inability to pay: suit against member: Notice of suit against a member for company debt + no action within 10 days; Section 375(4)(b). The company must pay, secure or compound, get a stay, or indemnify the defendant.

How to solve Winding Up of Foreign Companies questions

Use this order for any case question on winding up of a foreign company. It follows provision, analysis, conclusion.

1Identify the entity. Confirm it is a body corporate incorporated outside India and that it carried on business in India.
2Check the trigger in Section 376: has it ceased to carry on business in India? Note any dissolution abroad and say it does not prevent winding up.
3State the consequence: it may be wound up as an unregistered company under this Part.
4Move to Section 375. Say that voluntary winding up is not allowed, so only the Tribunal can wind it up.
5Match the facts to a ground in Section 375(3): ceased business, inability to pay debts, or just and equitable.
6If debts are involved, test the deemed inability tests in Section 375(4), for example the debt above ₹1,00,000, the written demand and three weeks.
7Add any related point, such as Section 391(2) where securities raised under the Chapter remain unpaid.
8Conclude clearly: can the foreign company be wound up, on which ground, and by whom.

Quickest way: Three-check shortcut

When to use it: Use it for short-answer or short-note questions where you have only a few minutes.

Write the Section 376 rule in one sentence: foreign body corporate that ceased business in India may be wound up as an unregistered company, even if dissolved abroad.
Add: Section 375 applies, so no voluntary winding up, and the grounds are in Section 375(3).
Apply to the facts in two lines and give a one-line conclusion.

Common mistakes in Winding Up of Foreign Companies

Saying a foreign company dissolved abroad cannot be wound up in India.
Students assume a dissolved entity no longer exists everywhere.
Fix: Quote the words 'notwithstanding that the body corporate has been dissolved' from Section 376.
Applying Section 376 to a foreign company that is still carrying on business in India.
Students skip the condition that it has ceased to carry on business.
Fix: Check the trigger first. Section 376 needs cessation of business in India.
Allowing voluntary winding up of a foreign company.
Students mix up the rules for Indian registered companies with those for unregistered ones.
Fix: Remember Section 375(2): no unregistered company can be wound up voluntarily.
Mixing up Section 271 grounds with Section 375 grounds.
Both list circumstances for winding up by the Tribunal.
Fix: Section 271 is for companies under the Act. For foreign companies use the grounds in Section 375(3).
Treating the ₹1,00,000 test as 'one lakh or more'.
Students read the figure loosely.
Fix: The text says a sum exceeding one lakh rupees. A debt of exactly ₹1,00,000 does not meet it.
Confusing striking off under Section 248 with winding up of a foreign company.
Both end a company's existence.
Fix: Section 248 removes names of companies on the Indian register. Foreign companies are not on it as Indian companies, so Sections 375 and 376 apply.

Worked examples

Example 1

Zephyr Holdings Ltd, incorporated in Singapore, ran an office in Pune for six years and closed it in 2025. It was then dissolved in Singapore. Meritex Traders, a Pune supplier, is owed ₹4,50,000. Can Zephyr be wound up in India?

Show the solution

Zephyr is a body corporate incorporated outside India and carried on business in India.
It has ceased to carry on business in India, which is the trigger in Section 376.
Dissolution in Singapore does not matter, because Section 376 applies notwithstanding dissolution under the home country's laws.
So Zephyr may be wound up as an unregistered company under this Part of the Act.
Section 375(3)(a) fits as well, since the company is dissolved or has ceased to carry on business.
Meritex can also rely on Section 375(4)(a): debt of ₹4,50,000 exceeds ₹1,00,000. It must serve a written demand and wait three weeks without payment, securing or compounding.

Answer: Yes. Zephyr may be wound up in India as an unregistered company under Section 376, despite its dissolution in Singapore. It cannot be wound up voluntarily, so the Tribunal route applies.

Example 2

Nordic Textiles AS, a foreign company, still carries on business in India through a Chennai branch. A creditor says Section 376 allows its winding up as it is unable to pay debts. Comment.

Show the solution

Section 376 applies where a foreign body corporate that carried on business in India has ceased to do so.
Here Nordic is still carrying on business, so the Section 376 trigger is not met.
This does not mean it can never be wound up. As an unregistered company it falls under Section 375.
If it is unable to pay its debts, that is a ground under Section 375(3)(b). Inability may be shown through Section 375(4), such as an unpaid demand above ₹1,00,000 for three weeks.
The winding up would be by the Tribunal, as voluntary winding up is barred.

Answer: Section 376 does not apply as the company has not ceased business in India. The creditor may still seek winding up by the Tribunal under Section 375 on the ground of inability to pay debts, if that is proved.

Exam tips

Quote the key phrase of Section 376: ceased to carry on business in India, and 'notwithstanding' dissolution abroad.
Always pair Section 376 with Section 375. Examiners expect the grounds and the voluntary winding-up bar.
Check the facts for the trigger. A foreign company that still trades in India is a favourite trap.
For debt cases, use exact figures: more than ₹1,00,000, three weeks, ten days.
Close every case answer with a clear conclusion in one sentence.

Practice questions from Legislative Framework of Corporate Governance in India

Winding Up 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.

Winding Up of Foreign Companies: frequently asked questions

What does Section 376 of the Companies Act, 2013 say?

It says a body corporate incorporated outside India, which has been carrying on business in India and has ceased to do so, may be wound up as an unregistered company. This applies even if it has been dissolved under the laws of its home country.

Can a foreign company be wound up voluntarily in India?

No. Under Section 375(2), no unregistered company can be wound up voluntarily under the Act. Winding up has to be through the Tribunal.

What are the grounds for winding up an unregistered company?

Section 375(3) lists three. The company is dissolved, has ceased business or carries on business only to wind up its affairs. Or it is unable to pay its debts. Or the Tribunal finds it just and equitable.

How is inability to pay debts shown for an unregistered company?

Section 375(4) gives tests. One is a creditor's written demand for a sum exceeding ₹1,00,000, left unpaid for three weeks. Others cover unanswered notice of a suit against a member, an unsatisfied decree, or proof to the Tribunal.