Dear learned members,
Request your view if the investment made is a Downstream Investment in the following scenario under Rule 23 of FEMA (Non-Debt Instruments) Rules, 2019
A Ltd is a JV company having shareholding as follows:
B Ltd (Indian Company): 50.07%
C Ltd (Foreign Company):49.93% treated as FDI under FEMA and complied with FEMA.
Now A Ltd has made 100% investment in its WOS - D Ltd (Indian Company).
My understanding is that since A Ltd is having foreign direct investment less than 50% held by C Ltd, then D Ltd would not be considered as having any indirect foreign investment through A Ltd. Please confirm if my understanding is correct.
My query is B Ltd (Indian Company) is ultimately owned (100%) by E Ltd (Foreign Company). Considering this scenario, whether investment by A Ltd in D Ltd will be considered as DI or not. If it is a DI, how much will be indirect foreign investment held by D Ltd through A Ltd.
Regards,
Arjun
CAclubindia
