share holding pattern

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CS Seema (Querist)
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15 April 2011 dear all pls help me
what should be the share holding pattern at the time of incorporation in following
1- if foreign nationals involved all the subscriber are foreign national individual
2- if one subscriber is foreign company and one is foreign national
3-if both are foreign company
4-if one if is foreign individual and another is indian resident
5- the concept of benificial owner
6- if one if is foreign company and another is indian resident
is there any hard and fast rule for the purpose

Jayashree S Iyer

Jayashree S Iyer (Expert)
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15 April 2011 If the company is engaged in the sector in which 100% FDI investment is allowed i.e. automatic route, then the share holding pattern can be in any form, 100% foreign or 100% indian or partly foreign - individual or company , partly indian - individual or company and in any ratio.

However there are some sectors in which FDI is restricted. There the foreign investment can be only upto the limits specified or subject to FIPB approval. Please refer to FDI master circular issued by RBI for details of FDI investment limits.

The concept of beneficial owner comes where the shares are held by someone for the beneficial interest of another. E.g. A company owns 100% shares of a company but as per companies act, there must be a minimum of 2 subscribers to memorandum in case of a private company and 7 in case of a public company. In such case, the company will nominate some persons to hold some shares on its behalf. The names of these individuals will be entered in the register of members but the benefits under the Share Certificate will accrue to the real owner i.e. the Company. Refer Section 187C of the Companies Act, 1956.

CS Seema

CS Seema (Querist)
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15 April 2011 thanks sir but can you please tell me that if the foreign investment come under restricted cap then how can we decide the share holding for example if it is in 24 % cap then what is the criteria of allotment of share at the time of incorporation. The basic query is the deciding the % of share one can held at incorporation time

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