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

Zenith Textiles Ltd (India) proposes to merge with Orion Fabrics Inc., a body corporate incorporated outside India that has no place of business in India. Which statement is correct under section 234?

Orion is a foreign company. The Explanation to section 234 defines it as any company or body corporate incorporated outside India, whether or not it has a place of business in India. Lack of an Indian place of business therefore does not take it outside section 234.

  1. AOrion is not a foreign company because it has no place of business in India, so section 234 is inapplicable
  2. BOrion is a foreign company because the Explanation covers any company or body corporate incorporated outside India, whether or not it has a place of business in IndiaCorrect
  3. COrion is a foreign company only if it has a place of business in India
  4. DOrion is a foreign company only if it is a body corporate registered as a company in a Commonwealth country

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. Hence absence of an Indian place of business does not take Orion outside the definition. Treating that as a requirement is the key error in the other options.

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