The Minister of State in the Ministry of Corporate Affairs Shri R.P.N. Singh today informed the Rajya Sabha that Under the Companies Act, 1956, there is no specific provision for mandatory registration of foreign companies engaged in on-line business practices. However, keeping in view the present scenario which has been witnessing a large number of business transactions through electronic mode, the Government has proposed to modify the definition of term ‘foreign company’ under the Companies Bill, 2011 to provide for effective regulation of such entities. Clause 2(42) of the Bill, defines the term ‘foreign company’ to mean any company or body corporate incorporated outside India which,-
(a) has a place of business in India whether by itself or through an agent, physically or through electronic mode; and
(b) Conducts any business activity in India in any other manner
Requirements in respect of various disclosures and other compliances to be made by foreign companies have been provided in Chapter 22 of the Companies Bill, 2011 (Clauses 379-393).
The Companies Bill, 2011 has been introduced in the Lok Sabha on 14th December 2011 and the same has been referred to the Hon’ble Parliamentary Standing Committee on Finance.
The Minister was replying to a written question whether Government proposes to make enrolment of all foreign companies, engaged in online business practice, with the Register of Companies mandatory in a bid to make such companies engaged in online and direct to home business practices accountable.