[Advise Needed] Foreign Investment

[Chandru Singh]

Hi, Need inputs on receiving money from NRIs based in the US to Indian start-up. Is there anyone who understands the process well and has done it before? Please write to me.

Also, can someone please share the Indian policy document on this?

Best regards,

Chandru

[Nitish Kashyap B H]

Hi Chandru,

 

I am writing this response, after presuming that you are seeking clarity on the legal procedures. The procedure is simple –

 

1. ROC Compliances –
1. Valuation by a Registered Valuer;
2. Shareholders’ Subscription and Shareholders’ Agreement;
3. Special Resolutions/ Board Resolutions authorising share allotment, alteration of Articles of Association, increasing authorised capital (if required), etc.
4. Opening separate bank account for receipt of application money;
5. Share allotment procedures;
2. FEMA compliance/ Income Tax –
1. Cat 1 Merchant Banker Valuation;
2. FCGPR form filing;
3. Annual FLA return;

 

We can help you as a one stop shop. Feel free to call me (number in signature) if you need further clarity.

 

Regards,

Nitish Kashyap B H, CMA (US), M.COM

LEAD | Markets & Strategy | Finance Solutions

 

CRESTWORTH MANAGEMENT PARTNERS PVT LTD

Formerly AGILIS CONSULTANTS [KARNATAKA] PVT LTD

 

36, “Rêve Pabbathi”, 3^rd Floor, South End Road, Basavangudi, Bangalore – 560 004

+91-96324 04343   I  080 2677 1615 |  skype: nitishk_7   I    nit...@crestworth.in

 

Please note the change in my email id to nit...@crestworth.in

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[Dr Srikanth P Parthasarathy ACA ACMA UK PhD]

Chandru 

In most sectors FDI is permitted and including private investments from individuals. As a matter of fact you may even allot convertible debentures in certain cases. It is governed by RBI FEMA norms . You may visit the FDI regulations including FAQ at www.rbi.org.in

Needless to say you may even reach out for any specific advice 

Warm Regards

Dr Srikanth P Parthasarathy, ACA, ACMA (UK) , PhD-Finance 

Managing Partner, Chakra Venture Partners LLP

Family Office | M&A | Private Equity | Corporate Law | Tax 

Awarded Best Family Office Year 2019

India. Singapore. Hong Kong. UK

+91-99863 28808

www.chakravp.com

 https://in.linkedin.com/in/srikantparthasarathy

   

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[Dr Srikanth P Parthasarathy ACA ACMA UK PhD]

To be fair to the CA's out there. For FEMA compliance you may seek the valuation report from a Chartered accountant as well 

Warm Regards

Dr Srikanth P Parthasarathy, ACA, ACMA (UK) , PhD-Finance 

Managing Partner, Chakra Venture Partners LLP

Family Office | M&A | Private Equity | Corporate Law | Tax 

Awarded Best Family Office Year 2019

India. Singapore. Hong Kong. UK

+91-99863 28808

www.chakravp.com

 https://in.linkedin.com/in/srikantparthasarathy

   

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[Vimal Bhaya]

Hi,

Point 2a is mostly not required for foreign investments ( category 1 merchant banker was a tax dept requirement for domestic investments as per my CS, CA valuation was ok if it is entirely foreign investment, the point of merchant bank valuation was to curb fraud that's less likely with foreign investments so was not required at least in dec 2018). However, do check what's latest on Angel tax, things have been changing every month, tough for even CSs to keep up with.

Point 1d requires cooperation from your bank since they will have to control exact transfer rate as it fluctuates, otherwise even few rupees extra or less will mess up paper work and requires more paperwork (and money) to refund extra money back to foreign account. They hold funds and wait for exact transfer rate. Generally speaking, money transfer services like xoom CAN'T  be used for this, only wire in foreign currency works.

Also, repatriation of funds( when you give them that promised multiple return!), yearly asset reporting, taxability is something that you need to be careful about in interest of the investor. Taxation and reporting depends on country where the investor is based.

Ofc, the above suggestions are with disclaimer since things have been changing very fast. Work with a good CS team, do your own research, ask questions from them, double, triple check everything, understand the process, be on top of things.

Thanks

Vimal

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