08 April 2010
Company X (Company as per the Companies Act 1956), is planning to invest money by way of Equity in its Wholly owned Foreign Subsidiaries.
What are the Statuatory Compliances that Company X needs to fulfill while investing in its Foreign Subsidiary under the Companies Act 1956, FEMA and RBI Approvals if any required or not.
09 April 2010
Though I am not the right person for giving an opinion for this subject, however from my limited experience recently on these issues, I can guide you on from bird’s eye perspective.
You need to check the Oudside Direct investment ( ODI) Guidelines of RBI before investing. As per guidelines the investment up to US$ 5 million is covered under automatic route. For investment > then UD$ 5 Million RBI specific approval is required. Apart from this company X needs to file Annual Performance Report along with the audited account of the Sub Co's. A valuation from a category A merchant banker is required for investment > 5 Million USD and a valuation certificate of your company auditor is required for value less than that.
Please check ODI guidelines from RBI for further clarification.
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