ADN Ltd. an Indian Listed Company in real estate segment has participated in International Competitive Bidding process and successfully selected as L1 bidder for development of Air Linkage Bridge over the Arabian Sea for

CS Professional · Secretarial Audit, Compliance Management and Due Diligence · PYQS · June 2021
ADN Ltd. an Indian Listed Company in real estate segment has participated in International Competitive Bidding process and successfully selected as L1 bidder for development of Air Linkage Bridge over the Arabian Sea for Saudi Arabian Country. The total contract value is USD 40 Million and tenure of the contract is 3 years. As per audited financial statements for financial year 2020-21, the networth of ADN Ltd. is ₹15,000 Crore (USD 2000 Million, assume ₹75 per dollar). ADN Ltd. is willing to complete the project in Joint Venture with AL-Habibi inc. a Dubai based Company in real estate business since last 25 years by overseas investment after entering into a Joint Venture Agreement. The Statutory Auditor of the Company makes the statement that Indian Company is prohibited from making investment in a foreign entity engaged in real estate business. In this case, as a Company Secretary of the Company, answer the following: In case of 50% acquisition of shares of AL-Habibi inc., whether any valuation is required?

Answer & Explanation:

In case of partial / full acquisition of an existing foreign company, where the investment is more than USD 5 million, valuation of the shares of the company shall be made by a Category I Merchant Banker registered with SEBI or an Investment Banker/Merchant Banker outside India registered with the appropriate regulatory authority in the host country; and, in all other cases by a Chartered Accountant or a Certified Public Accountant.

Topics: Foreign Exchange Management Act (FEMA)

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