Good afternoon sir, I am akanksha I have a query that If a company purchases its raw material from its foreign holding company but does not pay back. Can it convert it into loan and issue shares rather than paying them in terms of money. Will fema allow such transactions As you taught us that ECB can be converted into equity but this is not ECB.

Yes, company can issue Shares for Consideration other than Cash. So, company can issue shares to its foreign holding company. But it has to comply with provisions of Companies Act and FEMA.

Answer given by Shubhamm Sir at 26-Apr-2023 03:21 PM