Capital reduction of a 100% foreign subsidiary of indian co

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Shriram Tripathy (Querist)
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11 January 2016 A Ltd is a Company resident in India having a 100% foreign subsidiary in Singapore (say B Ltd) . B Ltd was set up to purchase a mining asset with the help of C Ltd domiciled in Indonesia. 50% of the investments made by A Ltd in B Ltd is lying unutilised. Now A Ltd wants to bring back the unutilised investment in B Ltd through the Capital Reduction route.

My query is, what are the guidelines available or laws with regards to this available in India ? What the RBI guidelines, if any, with regards to this ? Is there any other restrictions?

Waiting for a quick reply.

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Guest (Expert)

16 January 2016 "A JV / WOS set up by the Indian Party as per the Regulations may diversify its activities / set up step down subsidiary / alter the shareholding pattern in the overseas entity (subject to compliance of Regulation 7 of the Notification ibid, in the case of financial services sector companies). The Indian Party should report to the Reserve Bank through the AD Category - I bank, the details of such decisions within 30 days of the approval of those decisions by the competent authority of the JV / WOS concerned in terms of local laws of the host country and include the same in the Annual Performance Report (APR - Part III of Form ODI) required to be forwarded to the AD Category-I bank.". Capital reduction is also a type of altering share holding pattern as described above. Consequently, you may do it and report in 30 days.

Shriram Tripathy

Shriram Tripathy (Querist)
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16 January 2016 Thanks Karthikeyan.Shall get back soon.

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Shriram Tripathy

Shriram Tripathy (Querist)
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16 January 2016 But A Ltd (the Indian Party) is a manufacturing Company. Will this Regulation apply to it?

Guest

Guest (Expert)

16 January 2016 Pls check the PM i have sent you in this regard