Foreing Company is Holding company of an Indian Company which is a Joint Venture Company, a Special Purpose Vehicle. As per the Shareholders' Agreement, Foreing company and its affiliates can hold upto 74% of equity in the joint venture company. Now, the Foreign company wants to subscribe shares in the joint venture company by avoiding FEMA and without attracting provisions of NBFC by allotting shares to one of its affiliate being an Indian Company.
My quesions are:
1. Whether Indian Company can be called as Affiliate of Foreing Company?
2. Can shares be allotted to the affiliated Indian Company at par and that too partly paid up shares?
Please quote relevant sections or case laws in reply.
CAclubindia
