TMI BlogChapter XXII- The Companies (Registration of Foreign Companies) Rules, 2014.X X X X Extracts X X X X X X X X Extracts X X X X ..... of Foreign Companies) Rules, 2014. (2) They shall come into force on the date 1st day of April 2014. 2. Definitions . (1) In these rules, unless the context otherwise requires,- (a) Act means the Companies Act, 2013 (18 of 2013) ; (b) Annexure means the Annexure enclosed to these rules; (c) For the purposes of clause (42) of section 2 of the Act , electronic mode means carrying out electronically based, whether main server is installed in India or not, including, but not limited to - (i) business to business and business to consumer transactions, data interchange and other digital supply transactions; (ii) offering to accept deposits or inviting deposits or accepting deposits or subscriptions in securities, in India or from citizens of India; (iii) financial settlements, web based marketing, advisory and transactional services, database services and products, supply chain management; (iv) online services such as telemarketing, telecommuting, telemedicine, education and information research; and (v) all related data communication services, whether conducted by e-mail, mobile devices, social media, cloud computing, document management, voi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stration by a foreign company in accordance with the provisions of sub-section (1) of section 380 and 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, and also from other regulators, if any, approval is required by such foreign company to establish a place of business in India or a declaration from the authorised representative of such foreign company that no such approval is required. (4) Where any alteration is made or occurs in the document delivered to the Registrar for registration under sub-section (1) of section 380, the foreign company shall file with the Registrar, a return in Form FC-2 along with the fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 containing the particulars of the alteration, within a period of thirty days from the date on which the alteration was made or occurred. 4. Financial Statement of foreign company.- (1) Every foreign company shall prepare financial statement of its Indian business operations in accordance with Schedule III or as near thereto as may be possible for each financial year including- (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of repatriation; and (vii) approval of the Reserve Bank of India or any other authority, if any. (c) Statement of transfer of funds (including dividends if any) which shall, in relation of any fund transfer between place of business of foreign company in India and any other related party of the foreign company outside India including its holding, subsidiary and associate company, include- (i) date of such transfer; (ii) amount of fund transferred or received; (iii) mode of receipt or transfer of fund; (iv) purpose of such receipt or transfer; and (v) approval of Reserve Bank of India or any other authority, if any. (3) The documents referred to in this rule shall be delivered to the Registrar within a period of six months of the close of the financial year of the foreign company to which the documents relate: Provided that the Registrar may, for any special reason, and on application made in writing by the foreign company concerned, extend the said period by a period not exceeding three months. 5. Audit of accounts of foreign company.- (1) Every foreign company shall get its accounts, pertaining to the Indian business operations prepared in accorda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or defining the constitution of a Foreign company shall be duly certified to be a true copy in the manner given below (1) If the company is incorporated in a country outside the Commonwealth- (a) the copy aforesaid shall be certified as a true copy by- (i) an official of the Government to whose custody the original is situated; or (ii) a Notary (Public) of such Country; or (iii) an officer of the company. (b) The signature or seal of the official referred to in sub-clause (i) of clause (a) or the certificate of the Notary (Public) referred to in sub-clause (ii) of clause (a) shall be authenticated by a diplomatic or consular officer empowered in this behalf under section 3 of the Diplomatic and Consular Officers (Oaths and fees) Act, 1948 (XL of 1948), or where there is no such officer, by any of the officials mentioned in section 6 of the Commissioners of Oath Act, 1889 (52 and 53 Vic. C. 10), or in any relevant Act for the said purpose. (c) The certificate of the officer of the company referred to in sub-clause (iii) of clause (a) shall be signed before a person having authority to administer an oath as provided under section 3 of the Diplomatic and Consul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r (b) a Notary (Public) of the country (or part of the country) where the company is incorporated: Provided that where the company is incorporated in a country outside the Commonwealth, the signature or seal of the person so certifying shall be authenticated by a diplomatic or consular officer empowered in this behalf under section 3 of the Diplomatic and Consular Officers (Oaths and Fees) Act, 1948, or, where there is no such officer, by any of the officials mentioned in section 6, of the Commissioners of Oaths Act, 1889 (52 and 53 Vic C 10), or in any relevant Act for the said purpose. (3) Where such translation is made within India, it shall be authenticated by- (a) an advocate, attorney or pleader entitled to appear before any High Court; or (b) an affidavit, of a competent person having, in the opinion of the Registrar, an adequate knowledge of the language of the original and of English. 11. Documents to be annexed to prospectus.- The following documents shall be annexed to the prospectus, namely:- (a) any consent to the issue of the prospectus required from any person as an expert; (b) a copy of contracts for appointment of managing director or mana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct , for at least three out of immediately preceding five years; (d) It fulfills such other eligibility criteria as may be laid down by the Securities and Exchange Board of India from time to time in this behalf. (3) The issuing company shall follow the following procedure for making an issue of IDRs: (a) the issuing company shall, where required, obtain the necessary approvals or exemptions from the appropriate authorities from the country of its incorporation under the relevant laws relating to issue of capital and IDRs. (b) issuing company shall obtain prior written approval from the Securities and Exchange Board of India on an application made in this behalf for issue of IDRs along with the issue size. (c) an application under clause (b) shall be made to the Securities and Exchange Board of India (along with draft prospectus) at least ninety days prior to the opening date of the IDRs issue, in such form , along with such fee and furnishing such information as may be specified by the Securities and Exchange Board of India from time to time: Provided that the issuing company shall also file with the Securities and Exchange Board of India, through a Merchant Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... underwrite the issue of IDRs. (j) the issuing company shall deliver the underlying equity shares or cause them to be delivered to an Overseas Custodian Bank and the said bank shall authorize the domestic depository to issue IDRs. (k) the issuing company shall obtain in-principle listing permission from one or more stock exchanges having nationwide trading terminals in India. Explanation- For the purposes of this rule,- (i) Domestic Depository means custodian of securities registered with the Securities and Exchange Board of India and authorized by the issuing company to issue IDRs. (ii) Merchant Banker means a Merchant Banker as defined in sub-regulation (cb) of regulation 2 of the Securities and Exchange Board (Merchant Bankers) Regulations, 1992. (iii) Overseas Custodian Bank means a banking company which is established in a country outside India and which acts as custodian for the equity shares of Issuing Company, against which IDRs are proposed to be issued by having a custodial arrangement or agreement with the Domestic Depository or by establishing a place of business in India. (4) The Merchant Banker to the issue of IDRs shall deliver for registra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd has not withdrawn such consent before the delivery of a copy of the prospectus to the Securities and Exchange Board of India and the Registrar of Companies, New Delhi, appears on the prospectus. (d) The provisions of the Act shall apply for all liabilities for mis-statements in prospectus or punishment for fraudulently inducing persons to invest money in IDRs. (e) The person(s) responsible for issue of the prospectus shall not incur any liability by reason of any non-compliance with or contravention of any provision of this rule, if- (i) as regards any matter not disclosed, he proves that he had no knowledge thereof; or (ii) the contravention arose in respect of such matters which in the opinion of the Central Government or the Securities and Exchange Board of India were not material. (6) (a) A holder of IDRs may transfer the IDRs, may ask the Domestic Depository to redeem them or any person may seek reissuance of IDRs by conversion of underlying equity shares, subject to the provisions of the Foreign Exchange Management Act, 1999 , the Securities and Exchange Board of India Act, 1992, or the rules, regulations or guidelines issued under these Acts, or any oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... office of the company; (ii) name and address of the Domestic Depository, the Overseas Custodian Bank with the address of its office in India, the Merchant Banker, the underwriter to the issue and any other intermediary which may be appointed in connection with the issue of IDRs; (iii) names and addresses of Stock Exchanges where applications are made or proposed to be made for listing of the IDRs; (iv) the provisions relating to punishment for fictitious applications; (v) statement or declaration for refund of excess subscription; (vi) declaration about issue of allotment letters or certificates or IDRs within the stipulated period; (vii) date of opening of issue; (viii) date of closing of issue; (ix) date of earliest closing of the issue; (x) declaration by the Merchant Banker with regard to adequacy of resources of underwriters to discharge their respective obligations, in case of being required to do so; (xi) a statement by the Issuing company that all moneys received out of issue of IDRs shall be transferred to a separate domestic bank account, name and address of the bank and the nature and number of the account to which the amount shall be credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the Issuing company, a report by the statutory auditor of the Issuing company, in such form as may be specified by the Securities and Exchange Board of India on - (A) the audited financial statements of the Issuing company in respect of three financial years immediately preceding the date of prospectus; (B) the interim audited financial statements in respect of the period ending on a date which is less than 180 days prior to the date of opening of the issue, if the gap between the ending date of the latest audited financial statements disclosed under clause (A) and the date of the opening of the issue is more than 180 days: Provided that if the gap between such date of latest audited financial statements and the date of opening of issue is 180 days or less, the requirement under item (B) shall be deemed to be complied with, if a statement, as may be specified by the Securities and Exchange Board of India, in respect of material changes in the financial position of Issuing company for such gap is disclosed in the Prospectus: Provided further that in case of an Issuing company which is a foreign bank incorporated outside India and which is regulated by a member of t ..... 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