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

Kestrel Holdings Inc., a foreign company with a place of business in Kolkata, issues a prospectus inviting the Indian public to subscribe to its shares. Which of the following is correct under the Companies Act, 2013?

Kestrel Holdings must issue a prospectus that is dated, contains the particulars required by the Act and is registered with the Registrar, because the prospectus provisions apply to foreign companies offering securities in India with prescribed modifications. It is neither free of conditions nor prohibited.

  1. AIt may issue the prospectus freely without any conditions as it is a foreign company
  2. BThe prospectus must be dated, state the particulars required by the Act, and must be registered with the Registrar, as the Act's provisions on prospectus apply to foreign companies with modificationsCorrect
  3. COnly the Reserve Bank of India may approve such a prospectus, with no Registrar involvement
  4. DA foreign company is prohibited from ever inviting the Indian public to subscribe to securities

Explanation

Section 389 and Section 390 apply the provisions on prospectus to foreign companies offering securities in India, with prescribed modifications, so it must comply with the Act's prospectus requirements and registration with the Registrar. Foreign companies are not prohibited from offering securities, and the offer is not free of conditions.

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