15 November 2022
Sir, I would like to clarify the following Whether Company incorporated in India can transfer the proceeds received from IPO, to it's subsidiary company situated in abroad and wholly owned company 's situated in abroad? Whether there is any restriction available in FEMA or RBI or can be transferred through RBI Approval?
16 November 2022
Such transfer should have been disclosed in prospectus. Prospectus Summary briefly summarizes information that is disclosed in greater detail throughout the prospectus, including the company’s business, strategy, plans for using the funds raised in the IPO and financial condition, as well as the terms of the IPO itself.
Resident corporate entities eligible to make investment abroad in Joint Ventures/ Wholly Owned Subsidiaries.
Under the automatic route, a company does not require any prior approval from the regulatory authority for setting up a JV/WOS abroad
The criteria for investment under the automatic route are as under:
The total financial commitment of the Indian party in Joint Ventures/Wholly Owned Subsidiaries in any country other than Nepal, Bhutan and Pakistan is up to US$ 100 million or its equivalent in any one financial year or 100% of the net worth whichever is lower, and the investment is in a lawful activity permitted by a host country. The financial commitment in respect of Joint Ventures/Wholly Owned Subsidiaries in Myanmar and SAARC countries (other than Nepal, Bhutan and Pakistan) is up to US$ 150 million or its equivalent in any one financial year.
The Indian party is not on the Reserve Bank caution/defaulters list or under investigation by the Enforcement Directorate
The Indian party routes all the transactions relating to the investment in a Joint Venture/Wholly Owned Subsidiary through only one branch of an authorised dealer to be designated by it.
In respect of investments in non-core activities the investing company has a proven track record.
CAclubindia
