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CS Professional · Strategic Management and Corporate Finance · Foreign Funding - Instruments, Laws and Procedures

Under the Companies Act, 2013, what must an Indian company do before it issues depository receipts in a foreign country?

An Indian company must pass a special resolution in its general meeting before issuing depository receipts in a foreign country. Section 41 of the Companies Act, 2013 makes this the requirement, subject to the prescribed manner and conditions. An ordinary resolution is not enough.

  1. APass a special resolution in its general meetingCorrect
  2. BPass an ordinary resolution by postal ballot only
  3. CObtain prior approval of the National Company Law Tribunal
  4. DObtain a licence from the Registrar of Companies

Explanation

Section 41 provides that a company may issue depository receipts in any foreign country after passing a special resolution in its general meeting, in the manner and subject to conditions prescribed. An ordinary resolution is therefore insufficient, and no NCLT approval or ROC licence is mentioned in that section.

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