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CA Devender Chauhan (Group Financial Accountant) (1526 Points)

18 November 2010

In case of a private limited company which have only 2 shareholders who are foreign companies can the proxy be appointed on behalf of both of the companies for the purpose of holding an agm in india.

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Suresh Prasad (www.aubsp.com) (15630 Points)
Replied 18 November 2010

Originally posted by : DS Chauhan
	In case of a private limited company which have only 2 shareholders who are foreign companies can the proxy be appointed on behalf of both of the companies for the purpose of holding an agm in india.

FOREIGN COMPANIES

Part XI of the Companies Act, 1956 containing Section 591 to 608 deals with the Companies incorporated outside India i.e. a "Foreign Company." The provisions of this part of the Companies Act, 1956 prescribes that its Sections 592 to 602 shall be applicable to Companies who are incorporated outside India which after the commencement of the Companies Act, 1956 establishes a place of business within India and Companies incorporated outside India having established place of business within India prior to the commencement of the Companies Act, 1956 and continue to have the said establishment. It says that a Company incorporated outside India and having an established place of business in India in which 50% or more paid up share capital is held by Indians then provisions of those sections shall apply to such Companies also.

Sections 592 to 602 applicable to such Foreign companies provide that they have to file with the Registrar of Companies:

- Various documents giving particulars,

- Returns regarding any alterations in the company,

- Balance-sheet and Profit & Loss Accounts of the company,

- Charges on any of the Companies' properties in India.

It also provides that the following provisions shall apply to Indian business of a Foreign Company:

- Registration of charges,

- Right to obtain copies of and inspect the trust deed,

- Books of account to be kept by the Company,

- Annual returns to be made by the Company,

- Inspection of books of accounts,

- Power of Central Government to direct special audit,

- Audit of cost accountants,

-Power of Registrar to call for inspection and investigation

(Contained in Sections 124 to 145, 125, 127, 118, 209, 159, 209-A,, 233-A, 233B, and 234 to 246 of the Companies Act)

Section 603 of the said part XI puts certain restriction on a foreign company offering documents for subscriptttions in India.

Though under the Companies Act, 1956, no formalities are required to be carried out for a Foreign Company establishing place of business in India except the filing of the documents provided for in Part XI; under the provisions of Section 29 of the Foreign Exchange Regulation Act, 1973 general or special permission of the Reserve Bank of India for continuing any place of business or establishing any place of business for carrying on activities of trade and Commercial nature by a foreign company is required.

Therefore, i think as the Both shareholders are foreign company the below mention provision will not apply:

As per Explanation of Sec.167( Power of Central Government to call annual general meeting):

Explanation.—The directions that may be given under this sub-section may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting.

176. Proxies.—(1) Any member of a company entitled to attend and vote at a meeting of the company shall be entitled to appoint another person (whether a member or not) as his proxy to attend and vote instead of himself; but a proxy so appointed shall not have any right to speak at the meeting.