What changed
Previously, remittances from assets of Indian companies under liquidation required prior RBI approval. Now, AD Category-I banks can directly permit such remittances under the Companies Act, 1956, following a court or liquidator order and tax clearance.
What it means for you
This simplifies the liquidation process for banks and companies by reducing RBI involvement. Banks must verify compliance with court orders, tax clearance, and auditor certificates ensuring all Indian liabilities are paid or provided for, and that winding-up is lawful.
What you must do
- Update internal procedures to process remittance requests from liquidating companies without prior RBI approval.
- Verify court or liquidator orders and ensure tax clearance certificates are submitted.
- Collect auditor certificates confirming all Indian liabilities are paid or provided for and winding-up complies with Companies Act, 1956.
- For voluntary winding-up, also obtain an auditor certificate stating no pending legal proceedings or impediments.
Who it affects
AD Category-I banks, Indian companies under liquidation, Liquidators and official liquidators, Income Tax authorities
What documents must a company submit for remittance under this circular?
The applicant must provide a no-objection or tax clearance certificate from Income Tax, an auditor's certificate confirming all Indian liabilities are paid or adequately provided for, and an auditor's certificate that winding-up complies with the Companies Act, 1956. For voluntary winding-up, an additional auditor's certificate is needed stating no pending legal proceedings.
Does this circular apply to all types of winding-up?
Yes, it applies to both court-ordered winding-up and voluntary winding-up, subject to the conditions mentioned, including compliance with any court or liquidator order.