My friend has got a NRI investor who is ready to invest in IT industry in India. Now, Confused on
which form of legal organisation they both have to tie-up. Firstly they decided to go for
partnership form of status. since FOREX inflows from NRI investor attracts FEMA and other RBI
guidelines. In addition to that provisions regarding registration under partnership act also
apply on them. This seem to be enormous formalities.
I suggested both the resident and NRI can enter in to joint venture agreement (JCO-as per AS27)
without creating any new organisation but having same share of management participation and
profits intact.
My doubts are -
a) which form (i.e partnership or joint-venture) has got more formalities under FEMA
b) can joint-venture be on-going basis? (i.e life time agreement possible)
c) the ceiling limit, which a NRI can invest in business in India as per FEMA
d) impact of transfer pricing as per sec.92 of IT Act,1961
e) any act regulating joint ventures and rules regarding registration of instruments of joint
venture?
Awaiting eagerly of responses
Thanks a lot.
CAclubindia
