Dear Friends,
Mr. A (Resident of US) (NRI) is the shareholder of XYZ Limited (Incorporated in India) (Listed on BSE)....
Mr. B (Brother of Mr. A) is resident of India..
XYZ Limited issues RIGHT shares..Mr.A gives Authority to Mr. B for paying the money on his behalf which Mr. B does from his Normal Indian Saving Bank Account.
Now;
1) Will this be treated as FDI Transaction ?
2) Will form FCGPR Part A be required to be filed ?
Please forward the supportings if any.
Karan- This is not a case of foreign direct investment since no foreign exchange is involved. Let me take it in other way- A as an NRI can have savings account in India and can pay for the shares (instead of approaching his indian brother B) and in this case also , it cant be called as FDI. but the question is that- in case when there is no foreign currency inflow for the share purchase, such shares will be non-repatriable and dividend as well as sale proceeds cant be repatriated to Outside india without RBI permission.
I endorse the views of Santosh. Unless there is receipt of inward remittance or debit to NRE/FCNR account, it is not FDI
CAclubindia
