FEMA

varun (Querist) 28 October 2009 This query is : Resolved
Dear Sir,

A US company say "X" had opened an Indian subsidiary say "I" holding 99% of the shareholding(the said indian arm has been incorporated as a company in india);the balance 1% being held by the Indian director.The US company "X" has been merged with another company worldwide;however the indian company "I" was not sold.Hence "X" floated another company "Z" in the US and transferred the 99% shareholding.Does "I" have to take any approvals from the Government of India/RBI/FIPB to avoid FEMA violations.

regards,

Varun

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Raj Kumar Makkad (Expert) 28 October 2009
No. As the holder company of 99% has just floated another company by its own and Indian company is its subsidiary so no change in the status of I and it is not going to violate FEMA regulations at all and thus no fresh approvals are required.

adv. rajeev ( rajoo ) (Expert) 29 October 2009
Even though US company merged with the another company Indian company which has got share in the US company is still with the US company as a subsidiary, hence fresh approval is not necessary

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