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Jayanta Bandyopadhyay   18 June 2024

Foreign subsidiaries

We , an unlisted public ltd co (family run) have a wos at Mauritius, who in turns have (a) another wos as well as (b) 70% stake in another company in Mauritis. That company also holds 90% stake in one Africa compan ,where an Indian individual holds 10%.

Now, we would like to shift these 2 step down subsidiary cos from  Mauritius to Dubai. What is compliance part on the part of Indian parent. We are not disturbing our own wos at Mauritius?

Kindly guide



Learning

 3 Replies

T. Kalaiselvan, Advocate (Advocate)     18 June 2024

A subsidiary company is owned by another company (holding company) either partially or entirely. The holding company controls the composition of the board of directors of the subsidiary company or more than 50% of its voting powers. Where a single holding company holds 100% voting powers, the subsidiary is known as the Wholly Owned Subsidiary (WOS) of the holding company.

n unlisted company is a company that is not listed on any recognised stock exchange, and its shares are not freely tradable on the stock exchanges. These companies fulfil their capital requirements by obtaining funds from friends, family members, relatives, financial institutions, or private placement.

Now to your question, the shifting of the companies to various places can be decided as per the memorandum of association or the AOA of the holding company or by any other bylaws in this regard.

You can consult your auditor on all such further issues 

Jayanta Bandyopadhyay   18 June 2024

Many thanks  Sir.

What about RBI compliance part,? As parent company is registered in Mumbai. To me, this appears to be a over stretched Chain of holding beyond 2 step down subsidiary.  Additionally, individual holding 10% stake with control in 1 St subsidiary,  May not be eligible for African Co.  Kindly enlighten me. Auditors are first time facing such scenario.  Regards 

T. Kalaiselvan, Advocate (Advocate)     18 June 2024

You may have to comply with the instructions or rules of RBI, if any.

There are plenty of auditors who know how to proceed further in this regard, hence you ignore your auditor and choose a better one.


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