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Aparna (Querist)

31 October 2009 HI..

A foreign holding company has borrowed loan from a bank abraod and has pledged its subsidiary's shares as collateral. The holding compnay has defaulted and the bank according to the agrrement is entilted to 65 percent shares. will the interest in the shares be recognized under the indian law? if so to what extent? is there any thing that RBI can do in this regard?

Please help...

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)

31 October 2009 The Bank has three options.

(1) To transfer the shares in the Bank's name.

(2) To acquire the shares and move for disollution of the company and proceeds will be taken over by the Bank.

(3) RBI role is supervisory role and when you submit the documents they will verify the authenticity of the doucments.

(4) You have to check whether the allotment is under automatic route or FIPB route and if FIPB route take a copy of approval and read the conditions for repatriation, the same will be applicable to foreign Bankers also.

M Prabhakar Menon

M Prabhakar Menon (Expert)

31 October 2009 The interest in the shares has to be recognised as it is by operation of the laws under which the loan was granted The RBI has to be kept informed through the company's bankers of the transfer of shares.

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