Report No. 148
3.5 The Companies (Foreign Interests) Act, 1918 (20 of 1918).-
The Companies (Foreign Interest) Act, 1918 was enacted to give power to the Government of India to prohibit the alteration, except with the sanction of Government of India, of Articles of Association which restrict foreign interest in certain companies and to provide for other purposes connected therewith. During the first World War, certain companies had been reconstituted in India on the lines approved by the Government of India. It was felt that new companies whose business was of importance to the security of India and of the British Empire as a whole should be restrained from altering their Articles of Association in such a way as to bring them under the control of foreign interest.
The Act, therefore, restricts the shares or interests held or the powers exercised by the persons other than British subjects from being altered without the consent of Governor General-in-Council. As far as can be ascertained, the subject-matter of such regulation can (wherever necessary) be taken care of by appropriate measure taken under the Foreign Exchange Regulation Act, 1973. Subject to departmental checking in this regard, the Act may be repealed.