Application of prospectus provisions to foreign companies (Sec 384-389)

# Foreign Companies — Prospectus & Registration (Sec 384-389)

## Scope

Sections 384 to 389 of the Companies Act, 2013 (and Chapter III) apply with the following nuance:

• Section 384 governs the other provisions applicable to foreign companies.
• Sections 387 to 391 generally are not applicable to a company incorporated outside India unless specifically extended.

## Section 386 — Interpretation (key terms)

## Section 387 — Dating of prospectus & particulars to be contained

A prospectus issued by a company incorporated outside India offering securities in India must contain:

1. Instrument constituting the company (charter/statutes), with date and country of incorporation.

2. Address of the registered office of the company outside India.

3. Whether the company has established a place of business in India — if so, its address.

4. The date and country in which the company was incorporated.

5. Date as of which the prospectus is issued — not more than 2 years from date of entitlement to commence business.

6. Statement of matters specified under Sec 26 (adapted).

### Restriction on application forms (Sec 388)

A foreign company shall not issue any application form for securities unless the form is accompanied by a prospectus that complies with these provisions.

Exceptions — application form may be issued without a prospectus where it is:

• Issued to enter into an underwriting agreement; or
• A bona fide invitation to a person to enter into such agreement; or
• Issued in relation to securities not offered to the public; or
• Issued to existing members/debenture holders; or
• Issued in relation to securities uniform with those already issued and dealt with on a recognised stock exchange.

## Section 389 — Expert's statement in prospectus

A company incorporated outside India shall not issue a prospectus including a statement purporting to be made by an expert unless:

• The expert has given his written consent to issue the prospectus with the statement in the form & context in which it appears;
• He has not withdrawn such consent before delivery of a copy to ROC; and
• A statement to that effect appears on the face of the prospectus.

## Section 389 (cont.) — Registration of prospectus

No prospectus shall be circulated/issued in India by a foreign company unless:

• A certified copy is delivered to the ROC for registration before publication.
• The prospectus states on its face that a copy has been delivered to ROC.
• The consent of every expert named is attached.
• Other prescribed documents are attached.

### Documents to be attached to prospectus

• Expert's consent under Sec 388.
• Copy of any contract for appointment of MD/manager or memorandum giving particulars.
• Copy of every material contract entered into within the last 2 years (otherwise than in ordinary course).
• Copy of the underwriting agreement.
• Signed by an authorised agent of every director / proposed director.

## Indian Depository Receipts (IDRs)

A company incorporated outside India may issue IDRs through a domestic depository in India (with overseas custodian bank holding the underlying equity shares), subject to:

• This Act and the Rules;
• SEBI Regulations; and
• RBI directions.

## Section 391 — Application of Sec 34 to 36 and Chapter XX

## Sec 392 — Punishment for contravention

Failure of a foreign company to comply with Sec 384–391 / Chapter XXII:

• Fine on company: ₹1 lakh up to ₹3 lakh; continuing default — ₹50,000/day.
• Every officer in default: imprisonment up to 6 months OR fine ₹25,000 to ₹5,00,000, or both.