Foreign holding company giving loan to indian co.??

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This query is : Resolved

Swati Sharma (Querist)

28 November 2016 Dear Member,

Can a Foreign Holding Company give loan to Indian Subsidiary Company?? What are the compliance associated with it??

Jatin Bajaj

Jatin Bajaj (Expert)

29 November 2016 YES, AS PER SECTION 186 OF THE COMPANIES ACT 2013, A FOREIGN HOLDING COMPANY CAN GIVE LOAN TO ITS SUBSIDIARY COMPANY UPTO 60% OF PAID UP SHARE CAPITAL, FREE RESERVES AND SECUTIES PREMIUM OR 100% OF FREE RESERVE AND SECURITIES PREMIUM BY PASSING BOARD RESOLUTION IN BOARD MEETING ( AS PER SECTION 179). BUT IF COMPANY CROSES THIS TRESHOLD LIMIT THEN BY PASSING SPECIAL RESOLUTION AT GENERAL MEETING.
BUT FOREIGN HOLDING COMPANY WILL NOT BE ABLE TO GIVE LOAN TO ITS SUBSIDIARY COMPANY IN THE FOLLOWING CASES.
IF SUCH FOREIGN COMPANY IS BANKING COMPANY OR INSURANCE COMPANY OR HOUSE FINANCE COMPANY IN THE ORDINRY COURSE OF BUSINESS
IF FOREIGN COMPANY IS ENGAGED IN PROVIDING INFRASTRUCTURAL FACILITIES OR BUSINESS OF FINANCING COMPANY ETC.
ROC REQUIREMENT : THE COMPANY WHO GRANT LOAN IS REQUIRED TO FILE MGT 14 WITHIN 30 DAYS OF BOARD RESOLUTION ( SECTION 179)

Swati Sharma

Swati Sharma (Querist)

29 November 2016 But will this loan not fall in ECB guidelines??

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