Section 381 of Companies Act 2013 Explained Simply

 

Under Section 381, a foreign company must:

• Make out a balance sheet
• Make out a profit and loss account
• In the prescribed form
• Containing prescribed particulars

These accounts must relate to

• The foreign company as a whole, AND
• Its Indian operations (where required)

Accounts of Foreign Company—What Exactly Is Filed?

This is where many people get confused.

Section 381 requires filing of:

• Global financial statements of the foreign company
• Along with Indian-specific disclosures

This ensures that:

• Indian authorities can see the overall financial position
• Indian operations are not isolated or hidden

Form FC-4 Under Section 381

The most practical aspect of Section 381 is Form FC-4.

Form FC-4 under Section 381 is the prescribed e-form used to file accounts of a foreign company with the RoC.

This is the core compliance form under this section.

What Is Filed in Form FC-4?

Form FC-4 includes:

• Balance sheet of the foreign company
• Profit and loss account
• List of all places of business in India
• Required attachments and certifications

It is a mandatory annual filing.

Timeline for Filing Accounts Under Section 381

A foreign company must file Form FC-4:

• Within 60 days of the date on which:
  • Its accounts are laid before the AGM in its home country

If AGM is not required under foreign law:

• Filing is done within 60 days of the date accounts are finalised

Missing this deadline attracts penalties.

Certified Copies and English Translation

Section 381 clearly states that:

• Accounts must be certified
• If documents are in a foreign language:
  • Certified English translations are mandatory

This ensures:

• Indian authorities can verify documents
• No ambiguity due to language barriers

Untranslated or uncertified documents are not accepted.

List of Places of Business in India

Another important requirement under Section 381 is:

Filing a list of Indian business places.

This includes:

• Branch office addresses
• Project office locations
• Liaison office addresses

This helps regulators track:

• Geographic presence
• Compliance jurisdiction
• Enforcement scope

Relationship Between Section 380 and Section 381

These two sections work together.

Section	Purpose
Section 380	Registration of foreign company
Section 381	Filing of accounts of foreign company

Registration brings the company into the system.
Section 381 keeps it accountable every year.

Can the Central Government Grant Exemptions?

Yes.

Section 381 allows:

• The Central Government to grant:
  • Exemptions
  • Modifications
  • Relaxation

But these are

• Rare
• Case-specific
• Issued through notifications

Companies should never assume exemption unless formally notified.

Penalty for Non-Compliance With Section 381

Failure to comply can lead to:

• Monetary penalties on the foreign company
• Penalties on authorised representatives
• Continued default penalties

Non-compliance also creates:

• Red flags during audits
• Issues in renewal of approvals
• Problems with banks and regulators

Section 381 defaults are taken seriously.

Common Mistakes Foreign Companies Make

From practical experience, these mistakes are common:

• Assuming overseas filing is sufficient
• Missing the 60-day deadline
• Not attaching certified translations
• Filing incomplete financials
• Forgetting Indian place-of-business list

Most of these are procedural—but costly.

Does Section 381 Apply to Dormant or Inactive Foreign Companies?

Yes.

If a foreign company:

• Is registered in India
• Has not closed or deregistered

Section 381 applies even if operations are minimal, unless formally exempted.

Section 381 vs Income Tax Filing

Section 381 filing:

• Is under Companies Act
• Filed with RoC

Income tax filing:

• Is under Income Tax Act
• Filed with Income Tax Department

Both are independent compliances.

Filing one does not replace the other.

Why Section 381 Is Important for Indian Stakeholders

Section 381 protects:

• Creditors
• Employees
• Government authorities
• Business partners

It ensures that:

• Foreign companies are not financial black boxes
• Indian operations are part of a transparent system

Practical Compliance Tips for Section 381

If you handle foreign company compliance:

1. Track AGM dates of parent company
2. Prepare Indian filing checklist in advance
3. Arrange certified translations early
4. Verify Form FC-4 attachments carefully
5. Maintain consistency with Section 380 records

Early planning avoids last-minute penalties.

Section 381 in One Simple Line

If we had to explain section 381 of the Companies Act 2013 in one sentence:

It requires every foreign company operating in India to file its financial statements and Indian business details annually with the Registrar of Companies.

Why Section 381 Matters More Than It Appears

Section 381 may look like a routine filing requirement, but it:

• Establishes financial transparency
• Enables regulatory control
• Supports enforcement
• Builds trust in foreign business operations

Ignoring it can damage credibility and continuity.

Final Thoughts: Section 381 Is About Accountability, Not Control

Section 381 of Companies Act 2013 does not restrict foreign companies—it simply asks them to:

• Disclose
• Report
• Remain transparent

For companies doing genuine business, compliance is straightforward and manageable.

For regulators, it ensures confidence.

That balance is exactly why Section 381 exists.

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