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CS Professional · Corporate Restructuring, Valuation and Insolvency · Cross Border Mergers

Bharat Tools Pvt Ltd (India) wishes to amalgamate with Lumen Corp, incorporated in country X, which has a place of business only abroad and none in India. A director argues Lumen is not a 'foreign company' for Section 234(2) because it has no place of business in India. Which view is correct?

Lumen Corp is a foreign company. The Explanation to Section 234 defines the term as any company or body corporate incorporated outside India, whether or not it has a place of business in India, so absence of an Indian office makes no difference.

  1. ALumen is not a foreign company because it has no Indian place of business
  2. BLumen is a foreign company only if the Central Government has notified country X
  3. CLumen is a foreign company only if it has a place of business in India
  4. DLumen is a foreign company, as the term covers any company or body corporate incorporated outside India whether or not it has a place of business in IndiaCorrect

Explanation

The Explanation to Section 234 defines foreign company as any company or body corporate incorporated outside India, whether having a place of business in India or not. Hence the director's argument fails. Notification of countries relates to sub-section (1), not to this definition.

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