# Foreign Company — Definition & Deemed Indian Company Rule
## Section 2(42) — Definition of Foreign Company
A 'Foreign Company' is any company or body corporate incorporated outside India which:
### Twin Test
1. Has a place of business in India —
- Directly OR Indirectly
- Physically OR Electronically
- On its own OR Through an agent
AND
2. Conducts any business activity in India in any other manner.
Both conditions must be satisfied for an entity to be a foreign company.
## Section 379 — The Deemed Indian Company Rule
### Trigger
Where NOT less than 50% of the paid-up share capital (equity + preference, whether singly or together) is held by:
- One or more Indian citizens, OR
- One or more companies/bodies corporate incorporated in India, OR
- A combination of both,
such a foreign company carrying on Indian business shall comply with:
- Chapter XXII provisions, AND
- Such other provisions of this Act as may be prescribed by the Central Government,
— as if it were a company incorporated in India (a 'Deemed Indian Company').
## Three-Scenario Decision Table
| Test | S1 | S2 | S3 |
|---|---|---|---|
| Incorporated outside India? | ✓ | ✓ | ✓ |
| Place of business in India? | ✗ | ✓ | ✓ |
| ≥50% share capital held by Indian citizens / Indian companies? | — | ✗ | ✓ |
| Status | Not covered | Foreign Company | Deemed Indian Company |
## Visual Map
```
Foreign Company (Sec 2(42))
│
├── Test 1: POB in India (direct/indirect/physical/electronic)?
├── Test 2: Business activity in India?
│ │
│ Both YES → Foreign Company
│
└── ≥50% paid-up capital with Indian citizens/companies?
│
YES → Deemed Indian Company (Sec 379) → Chapter XXII + prescribed provisions
```
## Section Applicability Map
| Sections | Applicable To |
|---|---|
| Sec 379 – Sec 386 | ALL foreign companies |
| Sec 387 – Sec 391 | Foreign companies that raise money in India via IDRs / prospectus |
| Sec 392 – Sec 393 | ALL foreign companies |