Small query on FEMA Regulation:
Rule 6(2)(I) of FEM (Transfer or Issue of any Foreign Security) Regulations 2004 reads as under:
"The total financial commitment of the Indian Party in Joint Ventures/Wholly Owned Subsidiaries shall not exceed 100%, or as decided by the Reserve Bank from time to time, of the net worth of the Indian Party as on the date of the last audited balance sheet."
Rule 2(o) defines "net worth" as paid up capital and free reserves. However, 'free reserves' has not been defined.
The question is whether securities premium account will be considered as free reserves for this purpose or not?
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