Formation of New Pvt Ltd Company

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JIMMY VADERA (Querist)
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28 January 2011 Hello
We have planning to open the New Pvt Ltd Company limited by shares.
Proposed structure of the company is having Directors : One Indian and other Foreign National.
Share Holders: 100% Foreign National
Nature of Business : Trading in Woodworking Machinery.
Authorized Share Capital: Rs.100000

Now can the company has 100% Share Holding of Foreign? or is there special permission required of RBI or Other ?

CS Taher

CS Taher (Expert)
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28 January 2011 Foreign companies can set up wholly-owned subsidiary in sectors where 100% foreign direct investment is permitted under the Foreign direct investment automatic route.

CS Taher

CS Taher (Expert)
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28 January 2011 Procedure under automatic route

FDI in sectors/activities to the extent permitted under automatic route does not require any prior approval either by the Government or RBI. The investors are only required to notify the Regional office concerned of RBI within 30 days of receipt of inward remittances and file the required documents with that office within 30 days of issue of shares to foreign investors.

List of activities or items for which automatic route for foreign investment is not available, include the following:

Banking

NBFC's Activities in Financial Services Sector

Civil Aviation

Petroleum Including Exploration/Refinery/Marketing

Housing & Real Estate Development Sector for Investment from Persons other
than NRIs/OCBs.

Venture Capital Fund and Venture Capital Company

Investing Companies in Infrastructure & Service Sector

Atomic Energy & Related Projects

Defense and Strategic Industries

Agriculture (Including Plantation)

Print Media

Broadcasting

Postal Services

CS Taher

CS Taher (Expert)
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28 January 2011 Procedure under Government approval

FDI in activities not covered under the automatic route, requires prior Government approval and are considered by the Foreign Investment Promotion Board (FIPB). Approvals of composite proposals involving foreign investment/foreign technical collaboration are also granted on the recommendations of the FIPB. Application for all FDI cases, except Non-Resident Indian (NRI) investments and 100% Export Oriented Units (EOUs), should be submitted to the FIPB Unit, Department of Economic Affairs (DEA), Ministry of Finance. Application for NRI and 100% EOU cases should be presented to SIA in Department of Industrial Policy & Promotion.

CS Taher

CS Taher (Expert)
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28 January 2011 General Permission of RBI under FEMA

Indian companies having foreign investment approval through FIPB route do not require any further clearance from RBI for receiving inward remittance and issue of shares to the foreign investors. The companies are required to notify the concerned Regional office of the RBI of receipt of inward remittances within 30 days of such receipt and within 30 days of issue of shares to the foreign investors or NRIs.

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