EASYOFFICE
EASYOFFICE
EASYOFFICE

Fema compliances for fdi in firm

This query is : Resolved 

Avatar

Querist : Anonymous

Profile Image
Querist : Anonymous (Querist)
18 June 2013 Hi,

Is there any FEMA compliances required for investment done by an individual in partnership firm in India?

Second question is what if the partnership firm having FDI is converted into the company what are the compliances requirement?

18 June 2013 Hi

Go to the following link, it may help you:

https://www.caclubindia.com/articles/note-on-foreign-direct-investment-in-india-13412.asp

Avatar

Querist : Anonymous

Profile Image
Querist : Anonymous (Querist)
18 June 2013 it does not mention about compliances required by partnership firm.......

The query is specific for FDI in partnership firm.

Please help thanks.


18 June 2013
FDI IN PARTNERSHIP FIRM / PROPRIETARY CONCERN:

(i) A Non-Resident Indian (NRI) or a Person of Indian Origin (PIO) resident outside India can invest in the capital of a firm or a proprietary concern in India on non-repatriation basis provided;
(a) Amount is invested by inward remittance or out of NRE/FCNR(B)/NRO account maintained with Authorized Dealers / Authorized banks.
(b) The firm or proprietary concern is not engaged in any agricultural/plantation or real estate business or print media sector.
(c) Amount invested shall not be eligible for repatriation outside India. 15

(ii) Investments with repatriation option: NRIs/PIO may seek prior permission of Reserve Bank for investment in sole proprietorship concerns/partnership firms with repatriation option. The application will be decided in consultation with the Government of India.
(iii)Investment by non-residents other than NRIs/PIO: A person resident outside India other than NRIs/PIO may make an application and seek prior approval of Reserve Bank for making investment in the capital of a firm or a proprietorship concern or any association of persons in India. The application will be decided in consultation with the Government of India.
(iv)Restrictions: An NRI or PIO is not allowed to invest in a firm or proprietorship concern engaged in any agricultural/plantation activity or real estate business or print media.

Avatar

Querist : Anonymous

Profile Image
Querist : Anonymous (Querist)
19 June 2013 I know all this provisions but my question is very specific whether there is any requirement for reporting to RBI or AD bank like FDI in companies?

Second questions is what about the implications in case the firm is converted into partnership firm?


24 July 2024 For investments in a partnership firm by an individual under FEMA (Foreign Exchange Management Act), and subsequent scenarios like conversion into a company or partnership firm, here are the specific compliances and implications:

### Investment by Individual in Partnership Firm

1. **FEMA Compliance for Investment:**
- Investment by an individual (resident or non-resident) in a partnership firm in India is generally governed under FEMA regulations.
- There are no specific reporting requirements to RBI or Authorized Dealers (AD Banks) for investments in partnership firms unless the partnership firm is engaged in sectors that require specific approvals or compliances (e.g., sectors under sectoral caps, sensitive sectors).

2. **Documentation:**
- It is advisable to maintain proper documentation of the investment, such as partnership deed, capital contribution details, and any agreements related to the investment.

### Conversion of Partnership Firm with FDI into a Company

1. **FEMA Compliance upon Conversion:**
- If a partnership firm with FDI (Foreign Direct Investment) is converted into a company, specific compliances under FEMA may apply:
- **Reporting to RBI:** Generally, conversion of a partnership firm with FDI into a company requires reporting to RBI through the AD Bank. This is to ensure that the foreign investment continues to comply with applicable regulations post-conversion.
- **Form FC-GPR:** If the conversion involves issue of shares to foreign investors or a change in the shareholding pattern that affects FDI norms, Form FC-GPR (Foreign Currency-Gross Provisional Return) may need to be filed with the RBI through the AD Bank.

2. **Other Compliances:**
- Any approvals or post-conversion compliances required under sector-specific regulations or conditions of the original FDI approval should be adhered to.
- Changes in ownership structure, directorship, and other corporate governance aspects should comply with Indian company laws.

### Implications if Firm is Converted into Partnership Firm

1. **FEMA Implications:**
- If a company with FDI is converted into a partnership firm, the foreign investment character may change significantly. This could affect compliance with FDI regulations applicable to companies.
- Depending on the specifics of the conversion and the sector involved, RBI and AD Bank may need to be notified to ensure compliance with applicable regulations.

2. **Other Considerations:**
- Tax implications of the conversion should be evaluated.
- Any contractual obligations or agreements related to the original investment structure should be reviewed and possibly amended post-conversion.

### Conclusion

- **Investment in Partnership Firm:** Generally, no specific FEMA reporting requirements unless in specific sectors or subject to sectoral caps.
- **Conversion to Company:** Requires compliance with FEMA regulations including reporting to RBI if there are changes affecting FDI norms.
- **Conversion to Partnership Firm:** May require review of FDI implications and compliance adjustments.

For precise advice tailored to your specific case, considering all nuances of the investment and conversion, consulting with a qualified legal or financial advisor familiar with FEMA and company law is recommended. They can provide detailed guidance based on the specific circumstances and objectives involved.



You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Join CCI Pro
CAclubindia's WhatsApp Groups Link


Similar Resolved Queries


loading


Unanswered Queries