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CS Executive · Setting Up of Business, Industrial and Labour Laws · Corporate Entities - Companies

Orion Corp, incorporated in a foreign country, carried on business in India and then ceased to do so. It has since been dissolved under the law of its country of incorporation. An Indian creditor asks whether Orion can still be wound up in India. Under Section 376:

Yes. Under Section 376, a foreign body corporate that carried on business in India and ceased to do so may be wound up as an unregistered company, even though it has been dissolved or ceased to exist under the law of its country of incorporation.

  1. AYes, it may be wound up as an unregistered company despite the foreign dissolutionCorrect
  2. BNo, dissolution abroad ends all liability in India
  3. CYes, but only as a registered company after re-incorporation in India
  4. DNo, winding up applies only while it still carries on business in India

Explanation

Section 376 allows a body corporate incorporated outside India which has been carrying on business in India, and ceases to do so, to be wound up as an unregistered company under the Part, notwithstanding its dissolution or ceasing to exist under its home law. Thus dissolution abroad does not defeat Indian proceedings; the option requiring continued business is wrong because the section covers ceasing.

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