Application of the Act to Foreign Companies [Sec 379]
# Application of the Act to Foreign Companies — Section 379
## When do Chapter XXII Provisions Apply?
Sections 380 to 386, 392 and 393 apply to all foreign companies.
However, the entire Act (with such modifications as the Central Government may prescribe) applies to a foreign company where:
> Not less than 50% of the paid-up share capital (whether equity or preference or partly equity and partly preference) of the foreign company is held by:
> - one or more Indian citizens, OR
> - one or more Indian companies, OR
> - both
>
> singly or in the aggregate,
>
> AS IF such company were a company incorporated in India.
## Twin Test
For full application of the Act, two conditions must be met:
1. Shareholding test — ≥ 50% of paid-up capital held by Indian citizens/companies
2. Business test — Such foreign company must be carrying on business in India
## Rationale
Where Indians effectively control a foreign company that does business in India, the law treats it on par with a domestic company for regulatory parity.
Worked example
### Example 1
Q. A company incorporated in Singapore has 60% of its paid-up capital held by Indian citizens and operates a branch in Mumbai. Which provisions of the Companies Act apply?
A. The entire Companies Act, 2013 applies to it (with prescribed modifications), as if it were an Indian company, because both tests of Sec 379 are met — Indian holding ≥ 50% and business carried on in India.
### Example 2
Q. A UK company has 70% Indian shareholding but no business operations in India. Apply Sec 379.
A. Sec 379 (entire Act application) does NOT apply because the business limb fails. Only the basic foreign-company provisions (Sec 380–386, 392, 393) would apply if it otherwise meets Sec 2(42).
⚠️ Common exam mistakes
Ignoring the 'business in India' limb — both limbs of Sec 379 are required.
Counting only equity capital — preference capital also counts toward the 50% threshold.
Aggregating only Indian citizens OR only Indian companies — the section permits aggregation of both classes together.
Bare-Act text Section 379 · Companies Act, 2013 · click to expand
Section 379: Where not less than fifty per cent. of the paid-up share capital, whether equity or preference or partly equity and partly preference, of a foreign company is held by one or more citizens of India or by one or more companies or bodies corporate incorporated in India, or by one or more citizens of India and one or more companies or bodies corporate incorporated in India, whether singly or in the aggregate, such company shall comply with the provisions of this Chapter and such other provisions of this Act as may be prescribed with regard to the business carried on by it in India as if it were a company incorporated in India.