Loan to foreign subsidiary, can convert to redeemable preference share

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An Indian holding company is enquiring about the possibility of converting a loan previously provided to its foreign subsidiary into redeemable preference shares. The discussion seeks clarification on whether this conversion is permissible under the Companies Act 2013, specifically considering the direction of the loan from the Indian parent to the foreign entity.

Rohit S

Rohit S (Querist)

17 June 2022 Can a loan given to foreign subsidiary given by indian holding company converted into redeemable preference share. pls help.
Pls provide comment as per companies Act 2013.

Thanks & regard

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

18 June 2022 As per Section 62(3) of the Companies Act 2013 resolution, there is a procedure for conversion of loan into preference shares: Approve terms of the loan by passing a special resolution before taking of loan & file special resolution in e-Form MGT-14 within 30 days.

Rohit S

Rohit S (Querist)

18 June 2022 Thanks, but sir here Indian holding comp provided the loan to foreign subsidiary. Now Indian company had a asset wants to convert it in a preference share.

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