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Querist : Anonymous

Querist : Anonymous (Querist)

23 October 2013 Hi ,

One of my client is a director for a company in Singapore.

He want to invest the amount in that company.

Please let me know the formalities to be completed for the same.

Let me know what is the limit for the amount.

Thanks in Advance

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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26 October 2013 Direct investment outside India means investments, either under the Automatic Route or the Approval Route, by way of contribution to the capital or subscription to the Memorandum of Association of a foreign entity, signifying a long-term interest in the overseas entity (setting up / acquiring a Joint Venture (JV) or a Wholly Owned Subsidiary (WOS.

A. Funding for overseas direct investment can be made by one or more of the following sources:

Drawal of foreign exchange from an AD bank in India.

Swap of shares (refers to the acquisition of the shares of an overseas entity by way of exchange of the shares of the Indian entity).

Capitalization of exports and other dues and entitlements.

Proceeds of External Commercial Borrowings / Foreign Currency Convertible Bonds.

In exchange of ADRs / GDRs issued in accordance with the Scheme for issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and the guidelines issued by Government of India in the matter.

Balances held in Exchange Earners Foreign Currency account of the Indian Party maintained with an Authorized Dealer.

Proceeds of foreign currency funds raised through ADR / GDR issues.

In respect of (6) and (7) above, the ceiling of 100 per cent of the net worth does not apply.Further, if the source of funding is through availing ECB, the permissible limit is 400% of the networth of the Indian Party.

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