Investment by a Foreign Company in india

This query is : Resolved

SUBRAMANIAM (Querist)
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26 December 2008 M/s LB is a compny registered in USA.
M/s ILS is a company registered in India.
They are into the same business.The president of LB is infact the son of CMD of ILS.

Now, the family wants to open another company (different business line). Regarding funding, view of the experts is sought.

Whether it would be better if a new company is opened in India? Can LB invest in the new company direct ? What would be the case if the new company is opened as a (a) subsidiary of ILS or (b) the subsidiary of LB? What should be best modus operandi to transfer funds from US to India?

SKG & NG are the directors of ILS. AG (son of SKG) is the NRI & president of LB.
Can AG be appointed as Driector in the new Company and bring in funds as "unsecured loans by director?

CS Vivek Hegde

CS Vivek Hegde (Expert)
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26 December 2008 As per FEMA regulations the easiest way in the above situation is that LB can open a subsidiary in India. The funds can be transfered by way of subscription to MOA.

Bringing the funds as unsecured loan from AG will be difficult.