A foreign equity holder holding minimum 25% direct equity holding in the borrowing entity or minimum indirect equity holding of 51% in the borrowing entity is a recognised lender. Can the foreign equity holder dispose-off the holding once ECB is contracted?
External Commercial Borrowings (ECB) and Trade Credits - As on Jun 26, 2023
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Recognised lender status requires maintaining minimum equity throughout the ECB tenure; post-contractual divestment can breach eligibility. A foreign equity holder qualifies as a recognised lender only if it maintains the prescribed minimum equity holding thresholds in the borrowing entity for the entire tenure of the ECB; the minimum direct or indirect ownership conditions must be satisfied continuously and not only at contracting.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Recognised lender status requires maintaining minimum equity throughout the ECB tenure; post-contractual divestment can breach eligibility.
A foreign equity holder qualifies as a recognised lender only if it maintains the prescribed minimum equity holding thresholds in the borrowing entity for the entire tenure of the ECB; the minimum direct or indirect ownership conditions must be satisfied continuously and not only at contracting.
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