Accounts of a Foreign Company: Section 381

The accounts of a foreign company are governed by section 381 of the Companies Act, 2013. In every calendar year the company makes out a balance sheet and a profit and loss account in the prescribed form, delivers a copy to the Registrar, translates anything not in English, and sends with it a list of every place of business it has established in India as at the balance sheet date.

What are the accounts of a foreign company under section 381?

Sub-section (1) has two clauses and they are separate duties. Clause (a) is to make out a balance sheet and profit and loss account, in such form, containing such particulars and including or having annexed or attached such documents as may be prescribed. Clause (b) is to deliver a copy of those documents to the Registrar.

The frequency is stated as "in every calendar year", not by reference to a financial year. That is worth noticing next to an Indian company, whose financial year is defined in section 2(41) and, for most companies, ends on 31 March.

Almost all of the substance of clause (a) sits in the rules rather than in the section: form, particulars and annexures are all prescribed. This page does not name a rule number, because the rule set behind section 381 was not obtained during this run, and an unsourced rule number is worse than none.

What can the Central Government exempt?

The proviso to sub-section (1) is narrower than it first looks. It lets the Central Government, by notification, direct that in the case of any foreign company or class of foreign companies, the requirements of clause (a) shall not apply, or shall apply subject to such exceptions and modifications as may be specified in that notification.

Clause (a) only. The proviso does not, on its own words, touch clause (b)'s delivery duty, sub-section (2)'s translation duty, or sub-section (3)'s list of places of business. A company relying on an exemption notification therefore has to check which limb the notification actually reaches. That reading is drawn from the words of the proviso rather than stated in the section, and it is a reading, not a holding.

There is also a separate and wider exemption power for the whole Chapter in section 393A, inserted in 2021, which is covered on the validity of a foreign company contract page.

What is the list of places of business in section 381(3)?

Every foreign company must send the Registrar, along with the documents required under sub-section (1), a copy of a list in the prescribed form of all places of business established by the company in India, as at the date with reference to which the balance sheet in sub-section (1) is made out.

Two things follow from the drafting. First, the list is dated to the balance sheet, not to the filing, so it is a snapshot as at the accounting date. Second, "all places of business" carries the section 386 meaning, which includes a share transfer or registration office. A company whose only Indian presence is a registrar and transfer agent's office still has a place of business to list. See the place of business page.

Where the section 381 accounts show up in the record

They are the closest thing a foreign company has to the annual financial statements an Indian company files under sections 129 and 137. The section 381 delivery reaches the same office, the Registrar, and lands as a dated public document. Set against the standing section 380 file, it gives a reader two different vintages: a constitution and address file that updates on change, and an accounts file that updates once a year.

The places-of-business list in sub-section (3) is the part with the most information per line. It is a year-on-year series of where a foreign company operates in India, filed by the company itself, and a change in it is visible without any announcement.

Where this sits in the disclosure picture

• Documents a foreign company files with the Registrar covers the section 380 file this annual delivery sits on top of.
• Which provisions apply to a foreign company covers section 384(3), which requires books of account to be kept at the Indian principal place of business.
• What are books of account under section 128 covers the Indian-company section that 384(3) reaches across to.
• Section 129 financial statements covers the Indian-company equivalent of this filing.
• Foreign company under the Companies Act covers who section 381 applies to in the first place.

The accounts of a foreign company are a dated Registrar filing, and the places-of-business list attached to them is the part most readers overlook. Flock reports the filings themselves, each stamped with its date and linked back to the exchange or regulator that published it. What any of it means for you is your call to make.