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

Orion Global Inc., incorporated abroad, carried on business in India, raised money by offering securities under the relevant Chapter that remain unredeemed, and now wishes to close its Indian place of business. Which statement is correct under the Companies Act, 2013?

Chapter XX applies mutatis mutandis to closing Orion's Indian place of business, subject to section 376, because it raised money through securities that remain unrepaid or unredeemed. Section 391(2) makes this application conditional on such outstanding fund-raising.

  1. ASubject to section 376, Chapter XX applies mutatis mutandis to the closure as if it were an Indian companyCorrect
  2. BChapter XX never applies to a foreign company, so it may close freely
  3. CChapter XX applies only if the company has no Indian directors
  4. DChapter XX applies regardless of whether monies were raised, as the foreign company is always treated as Indian

Explanation

Section 391(2) applies Chapter XX mutatis mutandis to closure of a foreign company's Indian place of business, subject to section 376, where it has raised monies through securities under that Chapter not yet repaid or redeemed. The condition is unrepaid money raised, not director residency. Applying it to all foreign companies ignores that condition.

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