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CMA Final · Corporate and Economic Laws · Compromises, Arrangements and Amalgamations

Which statement about the expression 'foreign company' for the purposes of section 234(2) of the Companies Act, 2013 is correct?

A foreign company here means any company or body corporate incorporated outside India, regardless of whether it has a place of business in India. The test is place of incorporation, not business presence, ownership or control.

  1. AIt means only a company incorporated outside India that has a place of business in India
  2. BIt means any company or body corporate incorporated outside India, whether or not it has a place of business in IndiaCorrect
  3. CIt means a company incorporated in India but controlled by non-resident persons
  4. DIt means a company incorporated outside India and registered with the RBI as a foreign investor

Explanation

The Explanation to section 234 defines foreign company as any company or body corporate incorporated outside India whether having a place of business in India or not. The test is place of incorporation, so option one wrongly narrows it and option three wrongly uses control.

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