India gets 78 foreign cos in FY21

As many as 78 foreign companies were registered in India under the Companies Law in 2020-21 financial year, according to official data. In 2019-20, a total of 124 foreign companies were registered in India. The count was at 118 in 2018-19. The data was provided by Minister of State for Corporate Affairs Rao Inderjit Singh in a written reply to Rajya Sabha on Tuesday. "Foreign Company is defined under Section 2 (42) of the Companies Act, 2013 (the Act) as any company or body corporate incorporated outside India which (a) has a place of business in India by itself or through an agent, physically or thorough electronic mode and (b) conducts any business activity in India in any other manner," the minister said.

To a query on whether certain foreign companies /entities are conducting online activities without getting themselves registered, Singh said no such complaint against any unregistered foreign company has been received. In a separate written reply, the minister said the government has undertaken a special drive for identification and striking off of shell companies. While noting that there is no definition of the term 'shell company' under the Companies Act, 2013, he said, "it normally refers to a company without active business operation or significant assets, which in some cases are used for illegal purpose such as tax evasion, money laundering, obscuring ownership, benami properties, etc."

The Special Task Force set up by the government to look into the issue of shell companies has among other things recommended the use of certain red flag indicators as alerts for identification of such companies. During the period from 2018 to June 2021, a total of 2,38,223 companies were struck off from the official records under Section 248 of the Act.