17 March 2011
M/S “M” Pvt. Ltd Co. having two directors Mr. A, & Mr. B (Indian resident) wants to appoint Mr. D (non resident) as director. Mr.B and Mr D are employees of M/S “L” of Switzerland.
M/S M Pvt. ltd is in the business of repairs and maintenance and supply of parts of Machinery. M/S M Pvt. Ltd purchases more then 90 percent of parts from M/S L of Switzerland. M/S M Pvt. Ltd does majority of repairs works in India and supply of parts is of Machinery supply by L to Indian markets. Some times M/S M Pvt. Ltd billed to M/S L for repair worked done on behalf of M/S L (machinery under warranty period).
Whether the transaction between M/S M Pvt. Ltd and M/S L of Switzerland is international transaction under chapter X i.e. Section 92 etc before appointment of Mr. D or after appointment of Mr. D? What care should be taken?
All this depends on the following: 1. If Mr. B & D participate in the management and control of M/s L. 2. If M/s L has any role in appointing the directors in M pvt. Ltd. 3. If the answer to this is negative then if there is any other set of persons who is appointing the directors in both the companies.
If the answer to all the three is negative then they will not be AE and hence no international transaction.
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