I don't know whether this is the correct forum for asking this query. My query is regarding transfer of Liabilities from one group company to another group company.
'X' is a group of companies consisting Company "A" (India), Company "B" (Africa), Company "C" (Singapore).
Company "A" in India is exporting raw material to Company "B" in Africa and export invoices are being raised from Company "A". In Company "B"'s books outstanding liabilities is on the name of Company "A" and payments are also made to Company "A" through Bank Transfer.
Now Company "A" wants "B" to transfer all its liability on the name of Company "C" in Singapore and make payments to them. All the invoices which "B" has received till date are from Exporter company "A".
What is the procedure of doing this liability transfer from "A" to "C" in "B"'s books? What will be the legal procedure to follow or just a letter or instructions from "A" would work.
Also, at the time of bank transfer bank requires copy of the invoice as proof and all the invoices are of Supplier Company "A"'s name. If we transfer money to "C" on behalf of "A", still bank needs an invoice from "C".
Kindly help me in this regard. An early response shall be highly appreciated.
06 June 2014
As per FEMA Repatriation includes use of the realized amount for discharge of a debt or liability denominated in foreign exchange. Hence the Invoice raised by "C" on "A" has to be produced to the Bankers as proof.
CAclubindia
