NBFC To make a foreign Co. its WOS

Hi Mayuri,

Dont know exact procedure for NBFC, I have pointed out some general points hope this will add some help to your efforts,

Establishment of Wholly Owned Subsidiary

Procedure to be followed:

1. Conduct a Board Meeting:

-- pass a resolution authorizing a director to sign the MOA of WOS

-- Appoint a Attorney/Consultant to incorporate a company as per the host country Laws.

-- Ensure the amount to be invested in WOS as applicable by the Indian company

After Incorporation of WOS:

-- Open a Bank Account in the name of the company (WOS) in the host country

-- Establish Registered Office

-- Indian party Investment 100%, which has been subscribed to the MOA of WOS, shall be deposited in the Account opened in host country.

2. Conduct a Board Meeting:

Pass a resolution for submission of ODA to RBI through AD to remit the funds

Ensure the FEMA regulations have been complied with i.e.

1 Only Private/Public Limited companies are permitted to establish WOS in host country

2 Investment is by way of Equity directly subscribing to the MOA of the subsidiary Company

3 Remittance can be by way of cash or export of goods and services

4 Dividends, royalties etc. should be repatriated to India (to the Indian Company)

5 Investment shall not exceed USD 50 million in a block of three financial years

6 Same core activity shall be carried on by the WOS in the host country

7 The Indian party has earned net profits preceding 3 financial years

8 Investment can be made out of EEFC Account Funds or drawing Forex from AD

9 To submit Form ODA duly completed to the AD for onward transmission to RBI

3. Obligations of Indian Party:

-- Receive share certificate as an evidence of Investment in foreign entity to the satisfaction of RBI

-- Repatriate to India all dues/receivable like dividend, royalties technical fees etc.,

-- Submit to the RBI every year an annual performance report in Form APR in respect of WOS outside India as stipulated by RBI

-- Pledge of shares of WOS as security for availing of funds for itself/WOS from an AD or Public financial institution in india is allowed.

Thanks

Jaideep Pandya