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Forming a subsidiary in singapore

patel (BU head) (26 Points)

13 February 2014

our Indan company (XYZ pvt ltd) is planning to float a subsidiary in singapore (XYZ pte ltd),

We are not making any investment in Singapore branch, except 1$ minimum working capital required to open Singapore subsidiary registration. With the vintage of promoters of the company, we can either get advance payments from customers or credit purchases from foreign suppliers.

We will not be affecting any sales/purchase/transfers of funds/stock either from Indian head office to Singapore subsidiary or vice versa.

do we need to take any approval/intimation from RBI in form of ODI or any other departments approval is required?

Please reply.

Thanks,

Patel

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CA. CS. Khushboo Dodhia Vora (Practicing Charatered Accountant) (125 Points)
Replied 14 February 2014

The below are broad conditions for Indian Company to invest overseas without seeking any permission i.e. Automatic Route.. If your case fulfills this condition then no need to seek any approval only post investment reporting will be requried to do..

The activities permitted under Automatic Route.

An Indian Party can make overseas direct investment in any bona fide activity (except those that are specifically prohibited). However, for Indian Party engaged in the Financial Services sector, certain additional conditions specified in Regulation should be adhered to.

The conditions for direct investment under the Automatic Route are as under:

the total ‘financial commitment’ of the Indian Party in WOSs shall not exceed 100 per cent of its net worth and the investment is in a lawful activity permitted by the host country;
The direct investment is made in an overseas WOS engaged in a bona fide business activity.
the Indian Party is not on the Reserve Bank’s exporters caution list / list of defaulters to the banking system published/ circulated by the Credit Information Bureau of India Ltd. (CIBIL)/RBI or under investigation by the Enforcement Directorate or any investigative agency or regulatory authority;
The Indian Party has submitted up to date returns in Form APR [Form ODI part III] in respect of all its overseas investment. Not applicable in our case.
The Indian Party routes all the transactions relating to the investment in a WOS through only one branch of an authorised dealer to be designated by it.
The Indian Party submits Part I of the Form ODI, duly completed, to the designated branch of an authorized dealer.