Beauty Cosmetics, a company incorporated in Korea has established its branch office in Chennai for conducting its business in India. The structure…

(a) (i) Whether Beauty Cosmetics shall be deemed to be a foreign company or an Indian company? As per section 2 (42) of the Companies Act, 2013, a 'foreign company' means any company or a body corporate incorporated outside India which has: (a) a place of business in India whether by itself or through an agent physically or through electronic mode and (b) conducts any business activity in India in any other manner. In the given question, Beauty Cosmetics, a Korean company has established a place of business in India (branch office in Chennai) and also carries on the business in India. Hence, Beauty Cosmetics shall be deemed to be a foreign company under the Companies Act, 2013 for the business carried on by it in India. Further, according to section 379 (2) of the Companies Act, 2013, where not less than 50% of the paid-up share capital, whether equity or preference or partly equity and partly preference, of a foreign company incorporated outside India is held by: (i) one or more citizens of India; or (ii) by one or more companies or bodies corporate incorporated in India; or (iii) 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 foreign company shall also comply with the provisions of Chapter XXII and other prescribed provisions of the Companies Act, 2013, with regard to the business carried on by it in India as if it were a company incorporated in India. In the given question, 50% (10% + 20% + 20%) of the share capital of Beauty Cosmetics (incorporated in Korea) is held by Mr. L (Indian Citizen), Mr. R (Indian Citizen) and Fairness Cosmetics Limited (Indian Company) respectively. Hence, Beauty Cosmetics shall be deemed to an Indian company for the business carried on by it in India. (ii) Whether Beauty Cosmetics, for the business carried on by it in India, be required to comply with the provisions of the Act? Since, Beauty Cosmetics shall be deemed to an Indian company for the business carried on by it in India, it is required to comply with the relevant provisions of the Companies Act, 2013, as if it is an Indian company.