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Indian company pledge shares in overseas subsidiary

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Querist : Anonymous

Querist : Anonymous (Querist)

16 May 2011 Can an Indian company pledge its shares in an overseas subsidiary to secure payment obligations of the subsidiary?

CS Bijoy

CS Bijoy (Expert)

17 May 2011 For securing any payment obligation one need to pledge their share with the provider of money. Here Indian company can pledge their share on behalf of the subsidiary to the provider of money for securing payment obligation of the subsidiary.

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CA. Anuj Gupta

CA. Anuj Gupta (Expert)

03 July 2011 The shares of a JV/WOS can be pledged by an Indian Party as a security for availing fund based or non-fund based facility for the JV/WOS, from an authorised dealer/ public financial institution in India or from an overseas lender, provided the overseas lender is regulated and supervised as a bank and the total financial commitments of the Indian entity remain within the limit stipulated by the Reserve Bank for overseas investment from time to time.

Anuj
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