Foreign citizen share holding right

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SHIRAS (Querist)
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21 June 2015 Dear Sir
Our company is a software co. the Managing Director of the company is an Indian national.now he has been immigrant in United States and currently he has been citizen of United States of America.

So what is the maximum number of shares he can hold to the company. Is it 49% of shares or he can more than 49% share?
please help me any one

Thanks in Advance

Ankur Garg

Ankur Garg (Expert)
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25 June 2015 Can you share the law provision where there is restriction on your MD to hold specific percentage of shares.

As per my knowledge there is no restriction and he can continue to hold his previous shares.

Thanks

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SHIRAS

SHIRAS (Querist)
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25 June 2015 Thank you for reply,
I think he can hold only maximum 49% share. Because now he is an US citizen.
Is it correct?

Thanks

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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25 July 2024 In India, the maximum percentage of shares that can be held by a non-resident individual (including a person who is now a citizen of another country like the USA) in a software company is determined by the Foreign Direct Investment (FDI) policy and the sectoral caps set by the Government of India.

For the software sector, as per the current FDI policy (subject to any updates or changes), up to 100% foreign equity participation is allowed under the automatic route. This means that a company in the software sector can have 100% foreign equity, which includes shares held by non-resident individuals or entities.

Therefore, as long as the software company complies with the sectoral norms and FDI regulations, there is no restriction that limits a former Indian national, who is now a US citizen, to holding only up to 49% of the shares. They can potentially hold 100% of the shares in the company, depending on the company's structure and compliance with applicable laws.

It's important to consult with legal and financial advisors to ensure compliance with all regulatory requirements and to understand any specific conditions or approvals that may be necessary for foreign equity participation in the software sector or any other sector in India.

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