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CS Executive · Setting Up of Business, Industrial and Labour Laws · Setting up of Branch Office, Liaison Office and Wholly Owned Subsidiary by Foreign Company

Meridian Corp, incorporated in Dubai, 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 through a branch. Under the Companies Act, 2013, how is it treated regarding the business it carries on in India?

Meridian must comply with the Chapter and such other prescribed provisions of the Act for its Indian business as if it were an Indian company. This follows because Indian citizens or bodies corporate hold at least fifty per cent of its paid-up share capital under Section 379(2).

  1. AIt must comply with the Chapter's provisions and other prescribed provisions as if it were a company incorporated in IndiaCorrect
  2. BIt is exempt from all provisions as it is a foreign company
  3. CIt is treated as an Indian company only if the holding is 100%
  4. DIt need comply only with Section 380 filing

Explanation

Section 379(2) applies where not less than fifty per cent of paid-up capital is held by Indian citizens and/or Indian-incorporated bodies, singly or together. At 60% the threshold is met, so it must comply as if incorporated in India. A 100% holding is not required, and Section 380 alone does not suffice.

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