## Sections 390–393 – Other Provisions for Foreign Companies
### Section 390 – Indian Depository Receipts (IDR)
The Central Government may make rules governing the issue of IDRs by companies incorporated outside India. The rules deal with:
(i) the offer of IDRs;
(ii) disclosures required in the prospectus for the issue of IDRs;
(iii) the manner in which the depository deals with IDRs; and
(iv) the transfer and transmission of IDRs.
### Section 391 – Application of Sections 34, 35 & 36 to Foreign Companies
Sections 34–36 of the Companies Act apply mutatis mutandis to a foreign company that issues a prospectus or raises securities in India:
- Sec. 34 – Criminal liability for misstatement in prospectus.
- Sec. 35 – Civil liability for misstatement.
- Sec. 36 – Fraudulently inducing a person to invest.
Closure of Indian place of business: If a foreign company has raised money from Indians by issuing securities, and the amount has not yet been repaid or redeemed, then to close its place of business in India it must comply with Section 376 AND Chapter XX (winding-up). It cannot simply walk away.
### Section 392 – Punishment for contravention
| Defaulter | Penalty |
|---|---|
| Foreign Company | Fine Min ₹1,00,000 – Max ₹3,00,000 AND ₹50,000 per day for continuing default |
| Every Officer in default | Fine Min ₹25,000 – Max ₹5,00,000 |
### Section 393 – Effect of failure to comply
If a foreign company fails to comply with the provisions of the Act:
- It cannot sue anyone in India, and
- It is not eligible for set-off in any legal proceedings.
BUT — it can be sued by Indian creditors and stakeholders.
This is the 'sword without a shield' consequence — a powerful incentive for foreign companies to comply.