Ashwin (Information Seeker) (155 Points)
15 July 2013Dear All,
our company is a foreign subsidiary company and is a PVT. Ltd. Company, they are paying royalty to its 100% holding company, now my question is, can we issue equity shares to the holding company in lieu of paying royalty ???? if yes do we need to pass shareholder's resolution or only board resolution is sufficient?
Please advice
Regards
Ashwin
umaa's legal clinic
(simple solutions for complex legal issues)
(165 Points)
Replied 16 July 2013
Dear Ashwin,
1.An indian company may issue shares in lieu of payment of royalty to a fireign company subject to pricing guidelines specified by RBI.
2. There is no specific provision in the companies act, 1956 with regard to further issue of shares in the case of a private limited company.
3.The AOA of most private limited companies vest the power of issue of share capital in the board of directors by an express provision.
4. Once go through aoa and follow the procedure to issue shares in lieu of royalty.
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