Technical Query from Abhay.
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Following Query has been put by Abhay on Efforts Blog by way of comment.
Dear Brijesh,
our client make J.V with Foreign Co. The said foreign company had decided to bring plant & machinery as capital. can it is consider as issue of share in kind? Further whether it is permissible under FEMA ? I don't think that it is permissible. Further please tell the procedure to get approval from FIPB ?
Dear Abhay,
In your question form of J.V. has not been mentioned. I suppose they are creating a separate JV company. If that JV company issues its shares to foreign company, in consideration of plant and machinery brought by foreign company, it is certainly a case of issue of shares for consideration in kind. As per AS-10, machinery will be shown in the books of JV company either at fair market value machinery or fair market value of shares, whichever is more clearly available. (Refer para 11.2 of AS-10).
I have sent your query relating to FEMA to a company secretary. I will answer as soon as I get his expert opinion on FEMA related query.