Closure of foreign company in India
So before we get to understand the process of closure of foreign company in India, let us know what a foreign company actually is? How can we identify a company as a foreign company?
Here is the answer –
The Companies Act, 2013 defines foreign company as any company or body corporate incorporated outside India which;
- has a place of business in India whether by itself or through an agent, physically or through electronic mode; and
- conducts any business activity in India in any other manner.
The expression “place of business” includes a share transfer or registration office.
There is a two-stage registration process fora Liaison / Branch office of a foreign parent company. First is the approval of Reserve Bank of India and second is registration with the Registrar of companies. The foreign company establishes a place of business in India shall file Form FC – 1 to the ROC within 30 days of its establishment. The application shall also be supported with an attested copy of approval from the Reserve Bank of India under Foreign Exchange Management Act or Regulations. The license is given for three years and thereafter, it requires renewal.
A liaison office or a branch office or a project office of a foreign company can perform following activities in India-
- Act as a means of communication between the parent company (i.e. foreign company) and the Indian company.
- Be a representative face of the parent company in India.
- Establish relationship with Indian company by extending technical and financial collaborations.
Closure of these foreign companies in India requires RBI approval and a report from ROC as to the state of compliances. These offices must be closed once the purpose of setting them up is completed for which approval has to be taken from Income Tax Department or Registrar of Companies and AD or Reserve Bank of India. A No Objection Certificate is must required for closure of a place of business in India. All form filings should have been done in a proper manner so as to complete the procedure of closure without any non-compliance.