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

Orion Textiles PLC, incorporated abroad, raised money in India through a prospectus under the foreign-company provisions, and some of the securities remain unredeemed. It now wishes to close its Indian place of business. Which statement is correct?

Because the foreign company has unrepaid or unredeemed money raised through securities, Chapter XX applies mutatis mutandis to the closure of its Indian place of business as if it were an Indian company, subject to Section 376, under Section 391(2).

  1. AChapter XX provisions apply mutatis mutandis to the closure as if it were an Indian company, subject to Section 376Correct
  2. BIt may close freely since closure of a place of business is never regulated
  3. COnly the Registrar's discretion applies, with no reference to winding up provisions
  4. DChapter XX applies only if the company has been dissolved in its home country

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 money by offer or issue of securities under that Chapter that has not been repaid or redeemed. Orion's unredeemed securities satisfy this condition. Home-country dissolution is not a condition of Section 391(2).

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