Issue of shares

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Priyanka (Querist)
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18 January 2012 Can promoters memorandum subscription shares be issued at a premium in case of a Private limited company under 100% FDI and all shares held by foreign nationals?

CS Suraj Arora

CS Suraj Arora (Expert)
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18 January 2012 Dear Priyanka

The answer of Your Question is NO.
My Example will clear your Doubts:-
Suppose there is a Sectoral Cap in any Industry say 51%.Now What you do You brought Capital more than the Sectoral Cap by means of Shares alloted at premium.At One footing you are right that you have followed the Sectoral Cap But actually you have not followed.

By your method there is no use to prescribe Sectoral Cap in any Industry.

I Conclude you can not issues shares at premium beyond the valuation arrived at by using prescribed Method in FDI Policy.

Regards

Priyanka

Priyanka (Querist)
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18 January 2012 Thanks Suraj.My query further is that in case of share allotment to foreign nationals it has to be done according to the DCF valuation as per RBI guidelines, so if the DCF valuation is more than the face value then can the promoters initial subscription shares be issues at premium

CS Suraj Arora

CS Suraj Arora (Expert)
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19 January 2012 Look Priyanka

The guidelines given by RBI that Valuation should be as per DCF method is just ,you know,a joke.....

On your Projection basis you have to arrive at face value below 10 Rs by any way..

I conclude you can not issue shares at premium.

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