Is it against the Indian regulation to increase the paid up capital at face value?
Ours is a Indian registered company with 66.67% held by our foreign headquarters. We intend to increase the share capital however our local Director is not willing to top up his full share and has agreed to accept drop in his shareholding to 20%. So after capital injection the new shareholding will change from 66.67% foreign owned + 33.33% local owned to become 80% foreign owned + 20% local owned.
Directors would like to increase the share capital based on the face value but auditor claims it violated FEMA and RBI regulation.
Can you please enlighten on this matter?