Dear sir please give me your valuable opinion on the givensituation
AB PVT LTD Indian company having two shareholder one is A (NRE) holding only one share and seconed Is B (foreign company) holding 9999 share.
FDI come under automatic route
all the investment by “B”
My Question is can we issue unsecured convertible debenture to “B” because Pvt ltd company can not issue unsecured debenture
Unsecured convertible debenture issuance questioned where private company restrictions and foreign investor involvement may affect permissibility. Whether a private company may issue unsecured convertible debentures to a foreign corporate shareholder where the company is understood not to be permitted to issue unsecured debentures; facts include a two-shareholder structure with the foreign investor providing all new investment under the automatic FDI route. The core question concerns permissibility and compliance of issuing a debt instrument convertible into equity to that foreign shareholder given private company restrictions. (AI Summary)
TaxTMI 
TaxTMI 
