Thursday, June 30, 2011

Transfer by way of Sales of a Joint venture or Wholly Owned Subsidiary (JV or WOS) Outside India with write off without Prior Approval of Reserve Bank of India

Transfer by way of Sales of a Joint venture or Wholly Owned Subsidiary (JV or WOS) Outside India with write off without Prior Approval of Reserve Bank of India

Transfer by way of sale of shares of a JV / WOS involving write off of the investment

An Indian Party, without prior approval of the Reserve Bank, may transfer by way of sale to another Indian Party which complies with the provisions of Regulation 6 of FEMA Notification 120/RB-2004 dated July 7, 2004 or to a person resident outside India, any share or security held by it in a JV or WOS outside India subject to the following conditions:
 

(a) Indian Parties may disinvest without prior approval of the Reserve Bank, in the under noted cases where the amount repatriated on disinvestment is less than the amount of the original investment:
  1. in cases where the JV / WOS is listed in the overseas stock exchange;

  2. in cases where the Indian Party  is listed on a stock exchange in India and has a net worth of not less than Rs.100 crore; 

  3. where the Indian Party  is an unlisted company and the investment in the overseas venture does not exceed USD 10 million and 

  4. where the Indian Party is a listed company with net worth of less than Rs.100 crore but investment in an overseas JV/WOS does not exceed USD 10 million.
(b) Such disinvestments shall be subject to the conditions listed at items (ii) to (vi) of paragraph 2 above.

4. The Indian Party is required to submit details of such disinvestment through its designated AD category-I bank within 30 days from the date of disinvestment.

5. An Indian Party, which does not satisfy the conditions stated above for undertaking any disinvestment in its JV/WOS abroad, shall have to apply to the Reserve Bank for prior permission.
 
Ref :  
A.P. (DIR Series) Circular No. 73 dated 29 June 2011

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