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Forming subsidiary abroad

CA JAIKRIT MALIK (CHARTERED ACCOUNTANT ) (71 Points)

20 January 2012

Dear all , our co' is planning to float a subsidiary in singapore. do we need to an 1 individual shareholder with minimum of 10% shareholding + 1 resident director + 1 Cs ? 2.How much an Indian individual person invest in Foreign equity in Unlisted Overseas company ( as above)as per FEMA ? Can a person invest in the above subsidairy company with 10% shareholding in his individual capacity ???? without taking approval from the RBI ??? plzzzz guide me

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6 Replies

Ankush (CEO) (22 Points)
Replied 20 April 2012

Hi All,

I am interested in buying stake in Singapore company owned by my friend. Just wanted to understand can an Indian Individual buy stake in unlisted Singapore company, if yes then, is there any limt on percentage of shareholding that an individual can buy. The Singapore company that I am interested in buying stake is involved in commodity trading business in Singapore.

Please guide me.

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CA JAIKRIT MALIK (CHARTERED ACCOUNTANT ) (71 Points)
Replied 20 April 2012

YEs individual investor can invest in the equity shares of Foreign company subject to the condition prescribed with guidelines framed by RBI.

As per RBI Liberalized Remittance Scheme for Resident Individuals vide Foreign Exchange Management Regulations,2000-Circular No.64 dated Feb 4, 2004 , all Resident Individuals may freely remit upto USD 200,000 per financial year for any permissible current or capital account transaction or combination of both.

Under the scheme, resident individuals can acquire and hold immovable property or shares or debt instruments or any other assets outside India, without prior approval of the RBI.

So from the above scheme we are free to invest equity in foreign subsidiary Company without taking approval from RBI through the automatic route subject to the limit prescribed of USD 200,000.

CA JAIKRIT MALIK (CHARTERED ACCOUNTANT ) (71 Points)
Replied 20 April 2012

for further clarification require you just join the page link given below

https://www.facebook.com/groups/274102652657876/

Ankush (CEO) (22 Points)
Replied 20 April 2012

Thanks for information.

I have one more doubt:

Can Indian Resident Individual buy 100% equity of overseas company, which is involved in commodities trading in foreign exchange, under Liberalized remittance Scheme if value of 100% equity in under USD200,000 ?
If this is possible then, Is this under automatic route or Individual needs to take any permission ?