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Foreign Direct Investment Inward Remittance Complaince

{required when an Indian company receives foreign direct investment}

Price available on request

50% payable in advance and 50% upon completion

An Indian company can receive investment from abroad in line with provisions of foreign direct investment (FDI) policy of Government of India. FDI can be received through both automatic (no prior approval) and government (prior approval) route. The entire process is governed by the FDI policy which prescribes amongst other things the mode of investments i.e. issue or acquisition of shares/ convertible debentures and preference shares, manner of receipt of funds, pricing guidelines and reporting of the investments to the Reserve Bank of India.

 

Both the Indian company and foreign investor are required to ensure compliance with FDI guidelines. Non-compliance will result in heavy monetary penalty in form of fine and prosecution also. The entire process is complex and both company and foreign investor require services of a professional to effectively manage the requirements of FDI policy and ensure compliance.

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Modes of Investment under Foreign Direct Investment Scheme

  • an Indian company can raise FDI by issue of fresh shares/ convertible debentures to non-residents individuals/ entities
  • foreign investors can also invest in Indian companies by purchasing/ acquiring existing shares from Indian shareholders or from other non-resident shareholders.
  • issue of right/ bonus shares
  • issue of shares under Employee stock option scheme (ESOP)
  • issue of shares by Indian company under ADR/ GDR
  • other permitted methods

Prohibition on Foreign Direct Investment

FDI is not allowed in any Indian company which is engaged in or proposes to engage in the following activities-

  • chit fund business
  • nidhi Company
  • agricultural or plantation activities
  • real estate business or construction of farm houses (not including construction of housing / commercial premises, roads or bridges, educational institutions, recreational facilities, city and regional level infrastructure, townships)
  • trading in Transferable development rights (TDRs)
  • lottery business including Government/ private lottery, online lotteries, etc
  • gambling and betting including casinos etc.
  • manufacturing of Cigars, cheroots, cigarillos and cigarettes of tobacco or of tobacco substitutes
  • activities / sectors not open to private sector investment- (I) atomic energy and (II) railway operations

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Entry routes for investments in India

Under the FDI Scheme, investment can be made in equity shares, mandatorily and fully convertible preference shares and mandatorily and fully convertible debentures of an Indian company by non-residents through two routes:

Automatic Route: Under the Automatic Route, the foreign investor or the Indian company does not require any approval from the Reserve Bank or Government of India for the investment. It is applicable in case 100% FDI is allowed in activity carried on by the India company.

Government Route: Under the Government Route, the foreign investor or the Indian company should obtain prior approval of the Government of India.

Eligibility to invest in India
  • A non-resident person or entity (except citizen of or an entity incorporated in Bangladesh/ Pakistan which can only invest with prior approval of Government of India) can invest in India in accordance with FDI Policy and Foreign Exchange Management Regulations.
  • NRIs resident in Nepal and Bhutan as well as citizens of Nepal and Bhutan are permitted to invest in shares and convertible debentures of Indian companies on repatriation basis, subject to the condition that the amount of consideration for such investment shall be paid only by way of inward remittance in free foreign exchange through normal banking channels.
  • Erstwhile Overseas Corporate Bodies (OCB) (since OCBs have been de-recognized as a class of investor in India with effect from September 16, 2003) which are incorporated outside India and are not under adverse notice of the Reserve Bank can make fresh investments under the FDI policy as incorporated non-resident entities, with the prior approval of Government of India if the investment is through the Government Route; and with the prior approval of the Reserve Bank, if the investment is through the Automatic Route. However, before making any fresh FDI, an erstwhile OCB should through their AD bank, take a one-time certification from RBI that it is not in the adverse list being maintained with the Reserve Bank of India.
  • Foreign Institutional Investors (FIIs) registered with SEBI are eligible to purchase shares, convertible debentures and warrants issued by Indian companies under the Portfolio Investment Scheme (PIS) subject to a limit of 10% of the capital of the company and the aggregate limit for FII investment to 24% of the capital of the company.
Acquisition of shares under Scheme of Merger/ Amalgamation

Mergers and amalgamations of companies in India are usually governed by an order issued by a competent Court on the basis of the scheme submitted by the companies undergoing merger/amalgamation. Once the scheme of merger or amalgamation of two or more Indian companies has been approved by a Court in India, the transferee company or new company is allowed to issue shares to the shareholders of the transferor company resident outside India, subject to the conditions that :

  • the percentage of shareholding of persons resident outside India in the transferee or new company does not exceed the sectoral cap, and
  • the transferor company or the transferee or the new company is not engaged in activities which are prohibited under the FDI policy.

 

Package includes

all filings with RBI

allotment of shares/ debentures

annual return of FDI

returns with Government

complete documentation

Information required

Our dedicated professional will get in touch with you and explain the whole process and provide a checklist of the information required from your end.

Process

Our simple and robust process enables you to comply with this statutory requirement by click of a button. You just need to provide us required information and make payment. Thereafter, we will take care of the rest and manage this complex compliance for you. We will ensure complete compliance regarding receipt of FDI. 50% of the charges are payable in advance and balance 50% is payable upon completion of all the compliances therein.

Note :-

  • Timeline starts from receipt of complete and accurate documents/ information
  • Extra changes will apply for an early turnaround