Dear Team,
I am working in a PVT ltd. company. we have 4 shareholders - 3 NRIs and 1 Resident. Its a 100% equity based company. This year one of our NRI shareholder wants to give working capital loan to the company. Please confirm e on the following:
1. If it is possible.
2. Does it come under ECB (external commercial borrowings)?
3. what are the guidelines that we have to follow?
4. If he can lend then what should be interest that the company can pay him.
Thanks and regards,
Bhargavi.
Yes, the NRI Can give the loan to the company in form of unsecured loan. Donot classify that what loan he is giving i.e. working capital loan or otherwise.
2. Yes, the loan given by him come under ECB
3. For which RBI Compliances in respect of ECB will have to follow.
4. Company can pay any interest provided that sshould be reasonable.
Dear Mohit,
Thanks a lot for your reply. so we should follow the ECB guidelines. I will go through the circular. Just quick question - Is it mandatory to have the UNI?
Thanks and regards,
Bhargavi.
Dear Mohit,
Please read the ECB Policy which till very recently provided that ECB is not permitted for working capital.Now recently RBI has permitted ECB for working capital , provided ceratin conditions including the time period of 7 years are adhered to.
Anuj
femaquery @ gmail.com
Dear Anuj,
Under what category of recognised lender will the shareholder come in?
Thanks
Ashok
CAclubindia
