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Clarification On Sec 391(2) Of Cos. Act - Closure Of Place Of Business By A Foreign Company

Ministry of Corporate Affairs(MCA) has issued General Circular No. 01/2017 dated 22nd February, 2017 to all RDs, all ROCs, and the Stakeholders, which is reproduced as under:

1. Sub-Section (2) of Section 391 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 into force on 15th December, 2016. Stakeholders have sought clarification with regard to scope of application of the said sub-section.

2. The matter has been examined in the Ministry and it has been noted that sub-section (1) and sub-section (2) of section 391 needs to be read harmoniously.

Accordingly, it is clarified that provisions of sub-section (2) of Section 391 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 Companies Act, 2013.

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