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

Kaveri Global Pte. Ltd., incorporated in Singapore, has 60% of its paid-up share capital (equity and preference together) held by Indian citizens and Indian companies. It carries on business in India. What is the position under section 379?

Because Indian citizens and Indian bodies corporate hold at least fifty per cent of the paid-up capital, section 379(2) requires the company to comply with the Chapter and other prescribed provisions for its Indian business as if it were an Indian company.

  1. AIt need only comply with sections 380 to 386, 392 and 393 as an ordinary foreign company
  2. BIt is exempt from the Act because it is incorporated abroad
  3. CIt must comply with the Chapter and other prescribed provisions regarding its Indian business as if it were an Indian companyCorrect
  4. DIt must comply only if Indians hold 100% of its capital

Explanation

Section 379(2) applies where not less than fifty per cent of paid-up capital, equity or preference, is held by Indian citizens or Indian bodies corporate, singly or together. At 60% the threshold is met, so the company is treated as if incorporated in India for its Indian business. The first option ignores this extra obligation.

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