Dear All,
I am NRI considering a partnership with a small Indian Sole Proprietorship firm running a restaurant. My understanding is that restaurants fall under the automatic approval route under Foreign Direct Investment rules. The investment is intended to expand the scale of the existing business. I plan to route the initial funding as convertible debt, which depending upon the performance of the business gets converted to equity at a later stage.
I need guidance on:
(a) What is the most efficient corporate structure for the business, e.g. converting the Sole Proprietorship firm into a Private Limited Company or a Limited Liability Partnership?
(b) Would the initial debt be considered as an ECB and thus have a 3 year limit necessarily? Any other restrictions?
(c) What are the various FEMA provisions / RBI guidelines relevant for such a structure?
Thanks.
CAclubindia
