Dear Friends,
Can an Indian Public Company purchase majority stakes (of a foreign company) from existing shareholders of that foreign company (Secondary)? Is it permissable under Automatic Route - FEMA Regulations? Is there a necessity that the Investment by the Indian Company, be only through equity contribution (Primary)?
Thanks for all your help in advance.
Regards
Shiva
Investment in a foriegn company is a Capital Account Transaction, under FEMA.
I think it is nessesary to mak trh Equity Contributions only.
Do read Capital Account Regulations.
In order to make investment abroad under automatic route the amount of investment shouid not exceed 400% of the networth of the indian entity, investments through ADR /GDR funds exculded from this 400% limit further the investment must not be to undertake activty under financing sector, or real estate business.
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
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