satya (Service) 13 August 2015

Loan to subsidiary out of fdi.

Dear Members,

Kindly help in resolving one issue we are facing.

My company has received FDI and given loan out of this to it's own subsidiary company for construction of a project. The project will be for both entities. As per Section 186 (7) of Companies Act 2013 interest shall be charged on loan to subsidiary. If we charge interest to our own subsidary under companies act will it violate any FEMA rules.

Situation: Comany A ( Foreign entity) makes FDI in Company B an Indian entity. Company B gives loan out of FDI received to it's wholly owned subsidary Co. C . If Company B has to charge interest on loan to Co. C, will it violate FEMA rules.

Regards,

CS Satya

Reply Follow

3 Replies

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Law Aspire (Legal) 17 October 2017

Originally posted by : satya
	Dear Members, Kindly help in resolving one issue we are facing. My company has received FDI and given loan out of this to it's own subsidiary company for construction of a project. The project will be for both entities. As per Section 186 (7) of Companies Act 2013 interest shall be charged on loan to subsidiary. If we charge interest to our own subsidary under companies act will it violate any FEMA rules. Situation: Comany A ( Foreign entity) makes FDI in Company B an Indian entity. Company B gives loan out of FDI received to it's wholly owned subsidary Co. C . If Company B has to charge interest on loan to Co. C, will it violate FEMA rules. Regards, CS Satya