Dear Friends and Experts,
Please kindly suggest on the following Issue:-
1. There are Two Companies - ABC Pvt. Ltd.(INDIAN COMPANY) - 2 Shareholder and Directors as well and XYZ Inc. (USA COMPANY) - 2 Shareholder and Directors as well.
2. These two companies are having business transactions with each other.
3. Now, the Owners of these TWO Companies want to go for a Cross Holding of stake in the other respective Company through Mutual agreed Exchange of Shareholding.
4. There will NOT be any remmittance of Foreign Currency inbound and outbound.[No Actual Funds Inflow and Outflow]
5. SHARES WILL BE HELD BY THE INDIVIDUALS ONLY [i.e. SHAREHOLDER OF INDIAN COMPANY BECOMES SHAREHOLDER OF THE FOREIGN COMPANY AND VICE-VERSA] - SHAREHOLDING NOT IN THE NAME OF THE COMPANY.
Please kindly suggest Relevant FEMA Provisions and Companies Act Provisions whether above arrangement is allowed or not.