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mayankpatel802002 (CA Practice )     20 May 2011

NRI investment in pvt ltd/ Partnership firm

Dear professional Colleague

My question is whether NRI director( Nationality: indian) who brings money by way of  director contribution (50%) and by way of loan to company- is it allowable to repatriate loan ammount which he had given previously to pvt ltd. 

if possible by what means? pl suggest



 12 Replies

CS Bijoy

CS Bijoy (Expert)     20 May 2011

Foreign investment in India is restricted to a certain limit which you can get from the FEMA act 1999.If the limit exeed the director is not able to contribute such percentage, but if thelimit does not exeed the Director can bring such contribution, but only after obtaining the approval of RBI.

 

There are several limit for several sector. Currently, foreign companies are only allowed to own 10% of a business in the retail sector. Prime Minister Manmohan Singh is trying to convince his coalition partners to open up FDI along the lines of what is allowed in other industries. FDI limits for other sectors are as follows:

 

  • Banking - 74%
  • Non-banking financial companies (stock broking, credit cards, financial consulting, etc.) - 100%
  • Insurance - 26%
  • Telecommunications - 74%
  • Private petrol refining - 100%
  • Construction development - 100%
  • Coal & lignite - 74%
  • Trading - 51%
  • Electricity - 100%
  • Pharmaceuticals - 100%
  • Transportation infrastructure - 100 %
  • Tourism - 100%
  • Mining - 74%
  • Advertising - 100%
  • Airports - 74%
  • Films - 100%
  • Domestic airlines - 49%
  • Mass transit - 100%
  • Pollution control - 100%
  • Print media - 26% for newspapers and current events, 100 % for scientific and technical periodicals

 

valji

valji (Accounts manager-MBA)     20 May 2011

what are the limit for manufacturing company & what happen if director bring extra money wtherther it will refunable to director ,for this refund any rbi permission is required

CA. Anuj Gupta

CA. Anuj Gupta (Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA)     24 May 2011

Originally posted by : mayankpatel802002
Dear professional Colleague
My question is whether NRI director( Nationality: indian) who brings money by way of  director contribution (50%) and by way of loan to company- is it allowable to repatriate loan ammount which he had given previously to pvt ltd. 
if possible by what means? pl suggest

Kindly specify whether the loan is in foreifn currency or Indian rupees.

Also have you complied with FEMA regulations for investment in Indian company by NRI.

 

Anuj

0-9810106211

CA. Anuj Gupta

CA. Anuj Gupta (Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA)     24 May 2011

Originally posted by : valji

what are the limit for manufacturing company & what happen if director bring extra money wtherther it will refunable to director ,for this refund any rbi permission is required

Hi Valji,

Kindly specify what items shall the Indian Co. shall manufacture. Also loan from Directors is in Indian Rupees or Dollars.?

valji

valji (Accounts manager-MBA)     24 May 2011

for example food manufacturing company , As per my knowledge for Rs loan there is not any permission frm RBi but for dollaer loan we have to follow ECB guideline

The question is when NRI director send extra money towards share capital ,whether this should money is refundable ,in what time

whether comapny is allow to kept this money for loang time treating extra money is Loan from director

CA. Anuj Gupta

CA. Anuj Gupta (Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA)     30 June 2011

Originally posted by : valji

for example food manufacturing company , As per my knowledge for Rs loan there is not any permission frm RBi but for dollaer loan we have to follow ECB guideline

The question is when NRI director send extra money towards share capital ,whether this should money is refundable ,in what time

whether comapny is allow to kept this money for loang time treating extra money is Loan from director

There are certain requirements from RBI even in case of rupee loan from NRI.

 

The extra money should be refunded with in 180 days of receipt of same.

 

The Company cannot do so.

 

Anuj

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valji

valji (Accounts manager-MBA)     01 July 2011

tahnks for information for 180 days but it will be very helpful if you provide me RS loan requirement

 

it also beneficaial to other CCI memebers

Thanks in advance

CA. Anuj Gupta

CA. Anuj Gupta (Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA)     01 July 2011

Under FEMA Regulations, Indian companies are allowed to borrow from NRIs/ PIOs in rupees both on repatriation as well as non-repatriation basis but only in the form of Non-Convertible Debentures (NCDs) subject to certain conditions.

valji

valji (Accounts manager-MBA)     04 July 2011

STILL I AM  NOT CLEAR IF PRIVATE LIMITED COMPANY TAKEN RUPEES LOAN FROM NRO ACCOUNTS FROM NRI DIRECTOR THEN RBI PERMISSION IS NECESSRY ( UNSECURED LOAN)

PLEASE GIVE ME CIRCULAR FOR THIS REFERANCE BEACUSE IN THIS CASE NOT ANY FOREIGN EXCHANGE INVOLVE

CA. Anuj Gupta

CA. Anuj Gupta (Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA)     04 July 2011

As per Regulation 3 "no person resident in India shall borrow in rupees from, a person resident outside India"of Foreign Exchange Management (Borrowing and Lending in Rupees) Regulations, 2000 .

Also regulation 5provides that"a company incorporated in India may borrow in rupees on repatriation or non-repatriation basis, from a non-resident Indian or a person of Indian origin resident outside India , by way of investment in Non-convertible Debentures (NCDs) subject to certain conditions"

 

Anuj

0-9810106211

 
MR. MEHTA

MR. MEHTA (CA)     30 April 2012

DEAR GUPTA SAB, PL. TRHOUGH SOME LIGHT ON THIS: iF THERE IS PVT. LTD. COMPANY AND IT IS GETTING LOAN FROM NRI SHARE HOLDER IN RUPPES, THEN IS THERE ANY RESTIRCTIONS WITH POINT TO RBI?

Prashant Chavan

Prashant Chavan (Business Developer)     14 August 2012

 

Hi,

My self prashant chavan, sir my company is Pvt. Ltd (IT)company. One of my friend want to invest in my company, but he don’t have Indian passport, and he stay in London. Can he invest his money in my company? And how?   


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