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Wos in u.s.

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Rahul Rampuria

Director

21 Points Posted on 11 August 2016

Dear Sirs,

An Indian limited company wishes to buy the shares of a newly incorporated U.S. Company that will be involved in Diamond trade (precious stones). Amount of remittance shall be around USD 1000 only as there is no real worth in the company yet.

Are there any statutory permissions that need to be taken? Are there any restrictions imposed?

What disclosures will have to be made by the Indian company in its annual statements?

What are the relevant laws (like FEMA etc....)that need to be studied for this transaction and arrangement of buying 100% shares in the U.S. company?

Will the Indian company be subject to pay taxes on the profits of the U.S. company (note: not dividend payments will be made)?

Will the accounts of the U.S. company have to be consolidated/ disclosed in the anuual return of the Indian company

Thanks

Rahul Rampuria

Replies (1)

CS MOHIT SALUJA

PRACTICING CS Jalandhar 9914558709

4543 Points Posted on 12 August 2016

The main points need to be kept in mind are:

1. First thing to kepe in mind i that the investment can be made only upto 400% of the net worth of the indian company and not more than that of the same.

2. Real Estate and banking business are the two prohibted aresa where Indian company can not invest.

3.For this company need to contact the Aauthorised Dealers category-1 who will inturn is responsible for filing the ODI Form with RBI for intimation regarding investment outside in foreign company.

4.Yes the accounts need to be consolidaed at time of filing of return of the indian companuy