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CS Executive · Setting Up of Business, Industrial and Labour Laws · Corporate Entities - Companies

Brightway Corp., incorporated abroad, has 60% of its paid-up share capital (equity and preference together) held by Indian citizens and Indian companies taken together. It carries on business in India. What is the position under the Companies Act, 2013?

Brightway must comply with the foreign company Chapter and the prescribed provisions as if it were incorporated in India, because Indian citizens and Indian bodies corporate together hold at least fifty per cent of its paid-up capital. Aggregation of holdings is expressly allowed under Section 379(2).

  1. AIt must comply with the Chapter on foreign companies and prescribed provisions as if it were a company incorporated in IndiaCorrect
  2. BIt is exempt from all Indian company law provisions because it is incorporated abroad
  3. CIt must comply only if Indian citizens alone hold at least 50%
  4. DIt must comply only if the holding is 75% or more

Explanation

Under Section 379(2), where not less than 50% of the paid-up capital is held by Indian citizens or Indian companies or bodies corporate, singly or in aggregate, the company must comply as if it were incorporated in India. Here the combined 60% meets the threshold, and aggregation is allowed.

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