Sections 392 and 393 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 392 sets the fine for a foreign company, and for each officer in default, that contravenes Chapter XXII. Section 393 says that non-compliance does not make the company's contracts invalid, but the company cannot sue or claim on them until it has complied. Section 393A lets the Central Government exempt classes of companies by notification.
A foreign company that contravenes the Chapter is punishable with a fine of Rs 1 lakh to Rs 3 lakh, plus up to Rs 50,000 for every day after the first for a continuing offence. Every officer in default is liable to a fine of Rs 25,000 to Rs 5 lakh. The imprisonment limb was removed in 2020. Under section 393, contracts stay valid and the company can be sued, but it cannot sue, claim a set-off or counter-claim until it complies. The Corporate Laws (Amendment) Bill, 2026 proposes to change section 392, but it is not law.
Section 392: the penalty as it stands
Section 392 applies "without prejudice to the provisions of section 391" if a foreign company contravenes the provisions of the Chapter. The Chapter covers sections 379 to 393A, including documents (380), accounts (381), display of name (382), service (383), prospectus (387 to 389) and IDRs (390 to 391).
| Who | Penalty in the text |
|---|---|
| The foreign company | Fine of not less than Rs 1 lakh, which may extend to Rs 3 lakh |
| The foreign company, continuing offence | Additional fine up to Rs 50,000 for every day after the first during which the contravention continues |
| Every officer of the foreign company in default | Fine of not less than Rs 25,000, which may extend to Rs 5 lakh |
Two amendments by the Companies (Amendment) Act, 2020 are visible in the official text. The words "with imprisonment for a term which may extend to six months or" were omitted, with effect from 21 December 2020. The upper limit for officers was substituted, replacing "fifty thousand rupees, or with both" with "five lakh rupees". Officers of foreign companies are therefore now liable to a fine only, not imprisonment, under this section.
Note that the section speaks of the foreign company's "officer who is in default". Section 2 of the Act defines "officer who is in default", and that definition decides who is caught. This article does not go into it.
If you are unsure whether a foreign company's filings are complete, our foreign company filing team can review them against the Chapter.
Example
A foreign company opens an Indian branch and delivers its documents to the Registrar two months late, and its accounts have not been filed for a calendar year. Each contravention is a contravention of the Chapter, and the penalty is fixed by the section 392 range above, with daily additional fine for so long as the contravention continues. Officers in default are separately liable.
Section 393: contracts remain valid
Section 393 has two halves.
- Validity. Any failure by a company to comply with the Chapter does not affect the validity of any contract, dealing or transaction entered into by the company, or its liability to be sued in respect of it.
- Disability. The company is not entitled to bring any suit, claim any set-off, make any counter-claim or institute any legal proceeding in respect of such a contract, dealing or transaction, until it has complied with the provisions of this Act applicable to it.
The protection is for the counterparty. A customer, supplier or lender who dealt with a non-compliant foreign company is not left without a contract. The other side can enforce it, and the company cannot turn round and claim that its own breach voids the deal. The restriction on suing is temporary. Once the company complies, the bar lifts.
The text says "a company", not only "a foreign company". The section heads the Chapter on companies incorporated outside India, but the wording "until the company has complied with the provisions of this Act applicable to it" is broad. Read it in the context of the Chapter.
Section 393A: exemptions
Section 393A was inserted by the Companies (Amendment) Act, 2020 with effect from 22 January 2021. The Central Government may, by notification, exempt any class of foreign companies, or of companies incorporated or to be incorporated outside India (whether or not they have or will have a place of business in India), from any provision of the Chapter. A copy of each notification must be laid before both Houses of Parliament. Exemption comes only from a notification, so check that one exists and covers the company.
For the wider picture see sections 379 to 393: foreign companies.
Proposed change (Corporate Laws (Amendment) Bill, 2026)
Clause 90 of the Bill would amend section 392 by substituting the portion from "shall be punishable with fine" to "five lakh rupees". As drafted, the company would be liable to a penalty of one lakh rupees, and for a continuing contravention a further penalty of five hundred rupees for each day after the first, subject to a maximum of five lakh rupees. Every officer in default would be liable to a penalty of twenty-five thousand rupees and, for a continuing contravention, a further two hundred rupees for each day after the first, subject to a maximum of two lakh rupees.
In short, the Bill would move section 392 from a fine with a range to a fixed penalty with per-day amounts and caps. The Bill was introduced in Lok Sabha on 23 March 2026 and referred to a Joint Parliamentary Committee, whose report came on 3 August 2026. It is pending and not law as on 30 September 2026. Until it is passed and notified, the fine ranges in the table above apply.
Need help fixing foreign company defaults?
Late or missing filings by a foreign company can be regularised, and the earlier the better given the daily element in section 392. Our foreign company filing team can help work out what is outstanding and how to file it.
Key takeaways
- Company: fine Rs 1 lakh to Rs 3 lakh, plus up to Rs 50,000 per day after the first.
- Officers in default: fine Rs 25,000 to Rs 5 lakh; no imprisonment after the 2020 amendment.
- Contracts remain valid and the company can be sued despite non-compliance.
- The company cannot sue or counter-claim until it complies.
- Section 393A allows class exemptions by notification only.
- Bill clause 90 would convert the fine to a penalty. It is not yet law.
Read next
- Indian Depository Receipts: sections 390 and 391
- Prospectus of a foreign company: sections 386 to 389
- Documents a foreign company must deliver: section 380
- Foreign company annual filing requirements in India
Disclaimer: Based on the Companies Act, 2013 as amended up to 1 April 2021 (official consolidated text), read with later developments noted in the article; proposals in the Corporate Laws (Amendment) Bill, 2026 are pending and not law as on 30 September 2026. Verify current notifications and rules before acting.