how to treat money given to Pvt Ltd Co by its owner/director

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Parag S (Querist)

16 September 2009 Hi

Owner of Pvt Ltd company who is NRI, wants to send large amount in a company which will be used for expansion of the company. Can this be treated as non-interest bearing loan which will be repayed after 2 years? Is there a limit on how long you can have this loan going on?

Regards
Parag

A. Sankaranarayana

A. Sankaranarayana (Expert)

16 September 2009 Dear Mr. parag,

For taking loan from abroad, u need to take RBI Approval before u take a loan. As per my knowledge,

Ankur Garg

Ankur Garg (Expert)

17 September 2009 You may consider this amount as share application money or you may allot equity shares to such NRI against this money.

You have to file form-FCGPR with in 30 days of receipt of such money to RBI.

Within 6 months of receipt of this amount in India allotment should be done otherwise this amount would be liable to be refunded.

Regards

Ankur Garg

Ankur Garg (Expert)

17 September 2009 Download a very useful file titled "Reporting of FDI" from the link mentioned below:

https://www.caclubindia.com/share_files/files_display.asp?files_id=17003

Give a deep reading to this file to understand all points.

Regards

Parag S

Parag S (Querist)

17 September 2009 Mr Garg

Thanks for details.

If we consider the amount as share application money then do we need to issue additional shares against it?

The Pvt Ltd company is in business of acquiring land or doing JV for development of residential housing projects.

Thanks
Parag

Ankur Garg

Ankur Garg (Expert)

17 September 2009 You have to choices:

1. Treat the amount above as share application money and within 6 months of receipt allot shares against such share application money.

2. You may directly allot equity shares against the money received right now.

Adopt share application money route if you do not want to allot share right now.

Untill allotment of share such application will be treated as current liability of the company.

Regards

Parag S

Parag S (Querist)

17 September 2009 I have read in some other posts that such money can be kept for 7 years without alloting shares. Is that true?

What is owner wants to large sum, let us say send Rs 1 or 2 Crore which company will return to the owner after 3 years, can company treat the whole amount as share application money? Is there an upper limit?

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