Eligiblity for issue of shares
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
30 July 2013
A Pvt Ltd company has issued shares to its NRI Director. A CS Certificate is required certifying that the company is elegible for issue of shares under FDI.
The question is what are the conditions under which the company can issue shares to NRI under FDI?
The question is what are the conditions under which the company can issue shares to NRI under FDI?
30 July 2013
Hi
Read Master Circular on Issue of shares to NRI.
Indian Companies are generally allowed to raise funds from abroad in following method:
(i) Foreign Direct Investment in India (FDI)
(ii) External Commercial Borrowings (ECB)
(iii) Foreign Currency Convertible Bonds (FCCB)
(iv) Foreign Currency Exchangeable Bonds (FCEB)
FOREIGN DIRECT INVESTMENT IN INDIA (FDI)
Under Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000 (notification No.FEMA 20/2000-RB dated May 3, 2000) the Indian Companies are allowed to raise funds from overseas investors. An Indian company which is not engaged in any activity or in manufacturing of item included the List A and List B appended may issue fresh shares subject to the condition and sectoral cap as indicated under Foreign Direct Scheme, subject to the terms and condition specified .
WHO CAN INVEST IN INDIA
There are following categories of person resident outside India who may invest in the capital of Indian Company:
1. A non-resident entity (other than citizen of Pakistan or an entity incorporated in Pakistan)
2. A citizen or entity of Bangladesh under Government Route.
3. NRI resident as well as citizen of Nepal and Bhutan on repatriation basis.
4. Erstwhile OBCs as incorporated non-resident entities.
5. An FII under the Portfolio Investment Scheme
6. SEBI registered FIIs or NRIs through a registered broker on recognized India Stock Exchange.
7. SEBI registered Foreign Venture Capital Investor (FVCI)
An FII may invest in the capital of an Indian Company under the Portfolio Investment Scheme which limits the Individual holding of an FII to 10% of the capital of the company and the aggregate limit for FII investment to 24% of the capital of the company. The aggregate limit of 24% can be increased to the sectoral cap/statutory ceiling as approved by RBI time to time.
Read Master Circular on Issue of shares to NRI.
Indian Companies are generally allowed to raise funds from abroad in following method:
(i) Foreign Direct Investment in India (FDI)
(ii) External Commercial Borrowings (ECB)
(iii) Foreign Currency Convertible Bonds (FCCB)
(iv) Foreign Currency Exchangeable Bonds (FCEB)
FOREIGN DIRECT INVESTMENT IN INDIA (FDI)
Under Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000 (notification No.FEMA 20/2000-RB dated May 3, 2000) the Indian Companies are allowed to raise funds from overseas investors. An Indian company which is not engaged in any activity or in manufacturing of item included the List A and List B appended may issue fresh shares subject to the condition and sectoral cap as indicated under Foreign Direct Scheme, subject to the terms and condition specified .
WHO CAN INVEST IN INDIA
There are following categories of person resident outside India who may invest in the capital of Indian Company:
1. A non-resident entity (other than citizen of Pakistan or an entity incorporated in Pakistan)
2. A citizen or entity of Bangladesh under Government Route.
3. NRI resident as well as citizen of Nepal and Bhutan on repatriation basis.
4. Erstwhile OBCs as incorporated non-resident entities.
5. An FII under the Portfolio Investment Scheme
6. SEBI registered FIIs or NRIs through a registered broker on recognized India Stock Exchange.
7. SEBI registered Foreign Venture Capital Investor (FVCI)
An FII may invest in the capital of an Indian Company under the Portfolio Investment Scheme which limits the Individual holding of an FII to 10% of the capital of the company and the aggregate limit for FII investment to 24% of the capital of the company. The aggregate limit of 24% can be increased to the sectoral cap/statutory ceiling as approved by RBI time to time.
30 July 2013
INDIAN ENTITIES INTO WHICH FDI CAN BE MADE
There are below mentioned entity registered or incorporated under Indian law can raise funds against capital:
(i) An Indian Company
(ii) Partnership Firm
(iii) Proprietary Concern
(iv) Indian Venture Capital Undertaking(ICVF)
(v) Ventures Capital Fund (VCF)
(vi) Limited Liability Partnership (LLP)
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.
Foreign Direct Investment in Trust other than Venture Capital Funds (VCF) is not permitted. FDI is not allowed to invest in the above mentioned entities engaged in any agricultural/plantation activity or real estate business or print media. FDI in resident entities other than those mentioned above is not permitted.
INDIAN ENTITIES INTO WHICH FDI CAN BE MADE
There are below mentioned entity registered or incorporated under Indian law can raise funds against capital:
(i) An Indian Company
(ii) Partnership Firm
(iii) Proprietary Concern
(iv) Indian Venture Capital Undertaking(ICVF)
(v) Ventures Capital Fund (VCF)
(vi) Limited Liability Partnership (LLP)
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.
Foreign Direct Investment in Trust other than Venture Capital Funds (VCF) is not permitted. FDI is not allowed to invest in the above mentioned entities engaged in any agricultural/plantation activity or real estate business or print media. FDI in resident entities other than those mentioned above is not permitted.
30 July 2013
TYPE OF INSTRUMENTS
An Indian companies arrange fund from a person resident out of India by issue of following type of instrument which are given below:
1. Equity Shares
2. Preference Shares (Fully, Compulsory and Mandatory Convertible)
3. Debentures (Fully, Compulsory and Mandatory Convertible)
4. Issue of Foreign Currency Convertible Bonds (FCCBs)
5. Depository Receipts (DRs) (American Depository Receipts (ADRs)/Global Depository Receipts (GDRs)
5. Foreign Currency Exchangeable Bonds (FCEBs)
Indian companies which are eligible to issue shares to person resident outside India under the FDI Policy may be allowed to retain the share subscription amount in Foreign Currency Account, with the prior approval of RBI.
TYPE OF INSTRUMENTS
An Indian companies arrange fund from a person resident out of India by issue of following type of instrument which are given below:
1. Equity Shares
2. Preference Shares (Fully, Compulsory and Mandatory Convertible)
3. Debentures (Fully, Compulsory and Mandatory Convertible)
4. Issue of Foreign Currency Convertible Bonds (FCCBs)
5. Depository Receipts (DRs) (American Depository Receipts (ADRs)/Global Depository Receipts (GDRs)
5. Foreign Currency Exchangeable Bonds (FCEBs)
Indian companies which are eligible to issue shares to person resident outside India under the FDI Policy may be allowed to retain the share subscription amount in Foreign Currency Account, with the prior approval of RBI.
30 July 2013
For more details, go to the following link:
https://www.caclubindia.com/articles/note-on-foreign-direct-investment-in-india-13412.asp
https://www.caclubindia.com/articles/note-on-foreign-direct-investment-in-india-13412.asp
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