Object clause of shell company

Buddy,

By analyzing your question, I would like to know what do you mean by "Shell Company" ?

Secondly, you have to alter the Object Clause of the company within your group, which you have identified, as its MOA states that it is limited to provide Financial & Investment Consultancy and Stock Broking. Whereas you have to alter, not only as Investment Company. It has to be mentioned as Investments in "Overseas Companies" also. Without this clause you cannot invest in Overseas Companies.

Thirdly, the alteration of clause would fall in the definition of Investment Company and RBI permission has to be sought as you are going to invest in an Overseas Company. This is due to maintain our nations Foreign Exchange Reserve out-go. 

Fourth, you have to get permission not only from RBI, you have to seek permission from Central Government and in certain cases from High Court. There is law stating Central Government permission or High Court  permission has to be sought when more than Rs.50,00,000/- is taken out of our country whether as investment or others.

Fifth, A Company can invest in another company without requiring special power only if it is inside our country. When it comes to overseas, you have to seek permission.

Sixth, the most important. When there is no business in the identified company, the Income Tax department would question the source of funds for overseas investments. 

As you asked the question generally, the above mentioned conditions has to be checked.

Thank you Mr. Shankar ji for your valuable opinon.

We are going to invest in Indian listed Company. investment is not going outside india. Infact we are bringing FDI in India.

Shell company means a company floated only to invest in Shares of Listed company.

Shareholders of the shell company would be indian investor and Foreign Partner. They will together put money in Shell company so that shell company can buy shares of  Indian listed company.

Now my question is whether we require any special clause to be added in the Main Object of the Shell company?

Mr.Rahul,

The answer is in your query. The Shell Company requires a Special Clause in MOA as you have mentioned that FDI is made. 

When Foreign Exchange is involved, the Company's MOA should hold the appropriate clauses to run the specific business.

MOA is a documents which describes the nature of business.

FDI with foreign partner (Even the partner is of Indian origin) it has to be altered with Special Clause.