# Meaning of Foreign Company
## The Two-Element Test
A company qualifies as a foreign company only if BOTH of the following are true:
1. It is a company or body corporate incorporated outside India, AND
2. It:
- (a) Has a place of business in India (itself or through an agent, physically or through electronic mode), AND
- (b) Conducts business activity in India.
'Place of business' includes a branch office and a share transfer or registration office.
## Electronic Mode — Wide Definition
Electronic mode includes carrying on electronically (server may or may not be in India):
- B2B and B2C transactions, Data Interchange, Other Digital Supply Transactions
- Inviting/Accepting Deposits or subscription of Securities in India or from Indian citizens
- Financial Settlements, Web-based Marketing, Advisory & Transactional Services, Database services & products, Supply Chain Management
- Online services (telemarketing, telemedicine, education, information research)
- All related data communication services
## The Distinguishing Test — Activity vs. Mere Presence
Mere physical presence or meetings in India is NOT enough. There must be business activity in India.
## Provisions Applicable to a Foreign Company (with modifications)
- Section 128 — Keep Books of Account of Indian business at principal place of business in India.
- Section 92 — File Annual Return (Form FC-4) with ROC within 60 days of last day of FY.
- Section 71 (Debentures), Chapter VI (Registration of Charges), Chapter XIV (Inspection, Inquiry, Investigation) — apply mutatis mutandis.
## The 50% Rule — Treated Like an Indian Company
If ≥ 50% paid-up share capital (equity + preference combined) of a foreign company is held by:
- Indian citizens, OR
- Company/Body Corporate incorporated in India, OR
- Both,
then — for its Indian business — such company must comply with Chapter XXII and other prescribed provisions as if it were an Indian company.
Note: Sections 380 to 386, 392 and 393 apply to all foreign companies (regardless of the 50% test).