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CA Intermediate · Corporate and Other Laws · Companies Incorporated Outside India

Aurora Textiles PLC, a foreign company with a place of business in Kolkata, fails to comply with the registration requirements of the Companies Act, 2013 for foreign companies. Which statement is correct about the consequences?

The foreign company and every officer in default are liable to a fine, with a further daily fine for continuing default. The Act does not render its contracts void or cause automatic winding up, and the penalty is not confined to its Indian agent.

  1. AThe company and every officer in default are liable to a penalty, but the company's contracts remain validCorrect
  2. BThe company's contracts in India are void and unenforceable
  3. CThe company is automatically wound up by the Registrar
  4. DOnly the Indian agent is liable and the company is exempt

Explanation

On default the foreign company is punishable with a fine, with a continuing fine for continuing default, and every officer in default is also liable. The Act does not make the contracts void or provide automatic winding up. The company is penalised along with officers in default, so it is not exempt, and liability does not rest only on the agent.

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