Chapter III - Prospectus and Allotment of Securities
Section 41
Section 41: issuing depository receipts abroad
Section 41 is the Companies Act basis for raising money abroad through depository receipts. A company may issue depository receipts in any foreign country after passing a special resolution in its general meeting.
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This article is for general information. Refer to the Companies Act, 2013 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
A company may, after passing a special resolution in its general meeting, issue depository receipts in any foreign country in such manner, and subject to such conditions, as may be prescribed.
Introduction
The manner of issue and the conditions are left to rules made by the Central Government. Section 41 itself is one sentence.
Section 41 commenced on 1 April 2014 under S.O. 902(E). The India Code consolidated text shows no amendment, and the text is identical to the Act as published in 2013.
Key takeaways
Special resolution first
The company must pass a special resolution in its general meeting before issuing depository receipts.
Any foreign country
The receipts may be issued in any foreign country.
Prescribed manner and conditions
The manner of issue and conditions are those prescribed by rules, which must be checked at the time of issue.
What section 41 allows
A company may, after passing a special resolution in its general meeting, issue depository receipts in any foreign country in such manner, and subject to such conditions, as may be prescribed. Depository receipts are instruments issued abroad that represent underlying shares of the Indian company.
What the section does not cover
Section 41 deals only with company-law authority. It does not itself address foreign exchange, securities-market or tax requirements, which may also apply to an overseas issue. Rule-level conditions are not reproduced in this guide because the current rule text was not consolidated for this draft.
Practical preparation
Pass a special resolution in general meeting; check the current rules on the manner and conditions of issue; check whether other laws, such as foreign exchange and securities regulations, apply; appoint the overseas depository and the domestic custodian; record the issue in the company’s registers and filings.
Practical checklist
Do
- Obtain the special resolution before committing to an overseas issue.
- Take advice on foreign exchange and securities-market requirements in parallel.
Avoid
- Do not rely on a board resolution alone; section 41 requires a special resolution in general meeting.
Illustrative example
Hypothetical: a company plans an overseas issue
A company wants to raise funds from foreign investors through depository receipts.
Approval
The shareholders pass a special resolution in general meeting.
Conditions
The company checks the prescribed manner and conditions, and any other applicable laws.
Issue
The depository issues the receipts abroad against the underlying shares.
Outcome
- The company has the company-law authority required by section 41.
Glossary
- Depository receipt
- A negotiable instrument issued by an overseas depository, representing underlying shares of the issuing company.
- Special resolution
- A resolution passed in general meeting by the majority required for special resolutions under the Act.
Frequently asked questions
Does section 41 need shareholder approval?
Yes. The company must pass a special resolution in its general meeting.
Where are the detailed conditions?
In rules made under the Act. Section 41 says the issue is made in such manner, and subject to such conditions, as may be prescribed.
Need help applying this provision to your situation?
Contact BizeneedLast updated 11 October 2026