Board Resolution and Share Allotment

• The process begins with a board meeting where directors pass a resolution to issue shares.
  
• The resolution specifies the number, type, and value of shares to be allotted.
  
• The parent company agrees to subscribe to the proposed share capital.
  
• A Share Subscription Agreement may be executed if required.
  
• Allotment of shares must be completed within 60 days of receiving funds.
  

Remittance of Funds

• The parent company remits funds to the subsidiary’s bank account for capital infusion.
  
• The payment is made against the allotment of equity or preference shares.
  
• The funds must be received through proper banking channels in case of foreign investment.
  
• Subsidiary must issue a receipt acknowledging the remittance.
  
• Fund inflow must be recorded in the subsidiary’s books as share application money.
  

Issuance and Filing Requirements

• Upon receipt of funds, the subsidiary allots shares and issues share certificates.
  
• Form PAS-3 must be filed with the Registrar of Companies within 15 days of allotment.
  
• The Register of Members is updated with the parent company’s details.
  
• Share certificates must be issued within 60 days from the date of allotment.
  
• Proper stamp duty is paid on the issuance of share certificates as per state laws.
  

FEMA and RBI Compliance for Foreign Investment

• Foreign investment must comply with FEMA and sectoral caps under FDI policy.
  
• Reporting to the Reserve Bank of India is done through Form FC-GPR.
  
• A Certificate from a Chartered Accountant and KYC from the remitting bank are required.
  
• Subscription money must be received in foreign currency and converted as per FEMA rules.
  
• RBI issues a Unique Identification Number (UIN) for the transaction.
  

Accounting and Capital Structure Update

• The share capital and securities premium (if any) are recorded in the subsidiary’s balance sheet.
  
• The updated capital structure reflects the total issued and paid-up capital.
  
• The infusion increases the company’s equity base and improves creditworthiness.
  
• Any change in authorized capital requires prior shareholder approval and filing of Form SH-7.
  

Regular updates are made in statutory registers and ROC filings.