Treatment of Foreign Investment
This query is : Resolved
JIMMY VADERA
(Querist)
29 January 2011
Hello
We have planned to form New Company. Now company will have100000 as Authorised Capital. This capital would be alloted to two persons who are both Foreign Nationals. Can this be treated as Foreign Company? Would we be required to get the permission of RBI or FIBP or any other authority at the time of allotment of shares?
We have planned to form New Company. Now company will have100000 as Authorised Capital. This capital would be alloted to two persons who are both Foreign Nationals. Can this be treated as Foreign Company? Would we be required to get the permission of RBI or FIBP or any other authority at the time of allotment of shares?
CA PARAS BAFNA
(Expert)
29 January 2011
0.Any company registered in India is an Indian Company and its residential status for IT purpose will be "Resident".
1. Non-Resident individuals can not directly invest in shares of indian companies.
2 Foreign investors can enter into the business in India either as a foreign company in the form of a liaison office /representative office, a project office and a branch office by registering themselves with Registrar of Companies (ROC), New Delhi.
or as an Indian company in the form of a Joint Venture and wholly owned subsidiary.
3. For such matters specific approval of Reserve Bank of India is also required.
1. Non-Resident individuals can not directly invest in shares of indian companies.
2 Foreign investors can enter into the business in India either as a foreign company in the form of a liaison office /representative office, a project office and a branch office by registering themselves with Registrar of Companies (ROC), New Delhi.
or as an Indian company in the form of a Joint Venture and wholly owned subsidiary.
3. For such matters specific approval of Reserve Bank of India is also required.
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Juzer Sadikot
(Expert)
30 January 2011
Dear Jimmy
RBI/FIPB Regulates Foreign Direct/Indirect Investment by Foreign Exchange Management (Transfer and issue of Securities in India) Regulation 2000 and Foreign Investment policies press notes.
There are automatic routes of FDI (Foreign Direct Investment) for Investment in Companies in India by Non Residents i.e. without RBI/FIPB approval subject to that proceeds for FDI needs to be from NRE/Foreign Inward Remittance and procedural compliance.
In such case, reporting of FDI proceeds and issue of shares are to be reported to RBI via AD Category - I (FCGPR - Part 1). Further the Indian company has to do annual reporting to RBI (FCGPR - Part 2).
Further, there may be many complication as to Taxation of Indian Company and Transfer pricing.
Do revert for further clarifications.
Regards
Juzer
RBI/FIPB Regulates Foreign Direct/Indirect Investment by Foreign Exchange Management (Transfer and issue of Securities in India) Regulation 2000 and Foreign Investment policies press notes.
There are automatic routes of FDI (Foreign Direct Investment) for Investment in Companies in India by Non Residents i.e. without RBI/FIPB approval subject to that proceeds for FDI needs to be from NRE/Foreign Inward Remittance and procedural compliance.
In such case, reporting of FDI proceeds and issue of shares are to be reported to RBI via AD Category - I (FCGPR - Part 1). Further the Indian company has to do annual reporting to RBI (FCGPR - Part 2).
Further, there may be many complication as to Taxation of Indian Company and Transfer pricing.
Do revert for further clarifications.
Regards
Juzer
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JIMMY VADERA
(Querist)
08 February 2011
Whether trading in Wood Working Industry would be covered under Automatic Route for FDI? Also how the tax treatment would be different ? And why transfer pricing applicable?
CA. Anuj Gupta
(Expert)
29 May 2011
Yes the trading in wood working industry shall be covered under Automatic Route for FDI.
Transfer pricing shall be applicable for any transaction between indian co. or the parent co.
The issues can be discussed after having knowledge of all the facts of the case.
Anuj
Transfer pricing shall be applicable for any transaction between indian co. or the parent co.
The issues can be discussed after having knowledge of all the facts of the case.
Anuj
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