Overseas online apparel and fashion retailers selling in India without any physical presence in the country might have to register themselves with the Indian Government if the Ministry of Corporate Affaris under the newly formed Narendra Modi-led Government decides to literally interpret the Companies Act of 2013.
The new Companies Act was passed by the Indian Parliament in August last year, and some sections of the Act came into force from April 1, 2014. However, many sections, incluidng the one related to foreign companies, are yet to be implemented.
As per the Gazette of India
issued by the Ministry of Law and Justice, Section 2(42) of the new Companies Act defines “foreign company” as any company or body corporate incorporated outside India which— (a) has 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.
Under Chapter XXII related to ‘Companies Incorporated Outside India’, the Act states that every foreign company shall, within thirty days of the establishment of its place of business in India, deliver to the Registrar for registration—(a) a certified copy of the charter, statutes or memorandum and articles, of the company or other instrument constituting or defining the constitution of the company; (b) the full address of the registered or principal office of the company; (c) a list of the directors and secretary of the company; (d) the name and address or the names and addresses of one or more persons resident in India authorised to accept on behalf of the company service of process and any notices or other documents required to be served on the company; (e) the full address of the office of the company in India which is deemed to be its principal place of business in India; etc.
Section 380(2) of the same Chapter further states that “Every foreign company existing at the commencement of this Act shall, if it has not delivered to the Registrar before such commencement, the documents and particulars specified in sub-section (1) of section 592 of the Companies Act, 1956, continue to be subject to the obligation to deliver those documents and particulars in accordance with that Act.
Hence, if the Act is implemented in its literal spirit, overseas online apparel and fashion retailers who now ship to India without having any physical presence would have to submit their details to the Registrar of Companies.