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CA Intermediate · Corporate and Other Laws · Companies Incorporated Outside India

Zephyr Aero Inc., a company incorporated in Delaware, USA, sets up a liaison office in Pune and, through an agent, also begins a regular business of selling spares in India from a rented warehouse in Pune. Which of the following best describes its status under the Companies Act, 2013?

Zephyr Aero Inc. is a foreign company. It is incorporated outside India and has a place of business in India through its Pune warehouse and agent, where it conducts business activity. Registration with the Registrar is a later compliance duty, not a test of status.

  1. AIt is a foreign company because it is incorporated outside India and has a place of business in IndiaCorrect
  2. BIt is an Indian company because it carries on business in India
  3. CIt is a foreign company only if its Indian shareholding exceeds 50%
  4. DIt is not a foreign company until it registers with the Registrar

Explanation

A foreign company is one incorporated outside India that has a place of business in India, whether by itself or through an agent, physically or electronically, and conducts business activity in India. Zephyr satisfies both conditions through its Pune warehouse. Registration is a consequence of being a foreign company, not a condition for the status, so the last option is wrong.

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