Conversion of unsecured loan given by nri to equity

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

21 April 2014 An NRI has given unsecured loan/advance for development of a software to a private limited company in India. Can this unsecured loan be converted to equity? how? what would be the case if after conversion that NRI becomes the owner of more than 90% of the share capital of the company?

Rupesh Jain

Rupesh Jain (Expert)
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21 April 2014 R/SIR

WHEN YOU RECD MONEY FROM NRI THEN YOU FILE DOCUMENT IN RBI FOR MONEY RECD FROM OUTSIDE COUNTRY.

IN WHICH YOU SHOW IT IS UNSECURED LOAN THEN YOU CAN NOT CHANGE THAT.

AND ALSO YOPU CAN NOT MAKE DIRCT 90% NON RI MONEY IN YOU COMPAMNY. PLS SEE FOR THIS RBI GUIDLINES AND FEMA ACT.