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

Hartley Foods Inc., a foreign company, has an Indian place of business. It also issues a prospectus in India inviting the public to subscribe to its securities. Which statement reflects the correct position under the Companies Act, 2013?

Hartley Foods must comply with the Act's prospectus provisions, adapted as prescribed for foreign companies, including delivery of a copy to the Registrar before issue. Foreign incorporation does not exempt it, and it need not become an Indian company to offer securities to the public in India.

  1. AThe prospectus provisions of the Act do not apply because the issuer is a foreign company
  2. BThe prospectus must be issued as per the Act's provisions applicable to prospectus of companies, with modifications as prescribed, and a copy must be delivered to the Registrar before issueCorrect
  3. COnly SEBI rules apply, and the Registrar has no role at all
  4. DThe prospectus may be issued only after the company converts into an Indian company

Explanation

The Act provides that the provisions on prospectus, and on liability for misstatements in it, apply to a prospectus issued by or on behalf of a foreign company, with such modifications and adaptations as are prescribed. A copy must be delivered to the Registrar for registration before issue, as for other companies. It is wrong to say foreign companies are exempt, and conversion into an Indian company is not required.

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