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FEB 25, 2017

Application of winding-up provisions on Foreign Companies

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Section 391(2) of the Companies Act, 2013, states that the provisions of Chapter XX shall apply mutatis mutandis for closure of the place of business of a foreign company in India as if it were a company incorporated in India. These provisions have been brought in force on 15th December, 2016. Stakeholders have sought clarification with regard to scope of application of the section 391(2).

The matter has been examined by MCA and it has been noted that section 391(1) & (2) needs to be read harmoniously. Accordingly, it is clarified that section 391(2) of the Companies Act, 2013 would apply only in case of a foreign company which has issued prospectus or IDRs pursuant to provisions of Chapter XXII of the Companies Act, 2013.

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