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

Lakshmi Textiles Inc., a company incorporated in Delaware, USA, establishes a liaison office in Chennai and starts a place of business there. Under the Companies Act, 2013, which description best fits Lakshmi Textiles Inc. in relation to Indian law?

Lakshmi Textiles Inc. is a foreign company. The Companies Act, 2013 defines a foreign company as one incorporated outside India that has a place of business in India, directly or through an agent. Carrying on business in India does not convert it into an Indian company.

  1. AA foreign company, because it is incorporated outside India and has a place of business in IndiaCorrect
  2. BAn Indian company, because it carries on business in India
  3. CA private company registered under Part I of Chapter XXII
  4. DA subsidiary company of an Indian company by virtue of its Chennai office

Explanation

A foreign company means a company or body corporate incorporated outside India which has a place of business in India, whether by itself or through an agent, physically or electronically, and conducts business activity in India in any other manner. Lakshmi Textiles satisfies this. Carrying on business in India does not make it an Indian company, since incorporation is the test of nationality.

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