Dear Members,
Can anyone tell me the procedure of makeing a Foreign Company its Wholly Owned Subsidiary by NBFC AS PER RBI .
Regards,
Mayuri lal
Mayuri Lal (officer CS) (748 Points)
21 April 2011Dear Members,
Can anyone tell me the procedure of makeing a Foreign Company its Wholly Owned Subsidiary by NBFC AS PER RBI .
Regards,
Mayuri lal
Jaideep
(Service)
(1368 Points)
Replied 21 April 2011
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
CAclubindia
