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In May 2010, 24 foreign investment proposals, worth US$ 304.7 million. These include:
Asianet's US$ 91.7 million investment non-news and current affairs television channels. Rupert Murdoch-controlled Star India holdings' investment of US$ 70 million in Tata Sky. AIP Power investment of US$ 24.4 million in joint ventures. Source : India Brand Equity Foundation www.ibef.org
Automatic Route
Government Route
NRIs, PIO
FVCIs
VCF, IVCUs
Entry Options
Direct Investments; Indirect Investments; Liaison Office/Representative Office; Branch Office; Project Office; Company; Agent; Distributor; Franchise; Acquisition of Shares under Scheme of Merger/Demerger/Amalgamation
Types of Investors
A Non-Resident Individual resident outside India who is a citizen of India or is a person of Indian origin; Foreign Institutional Investor; Foreign Venture Capital Investor; An Individual; A Hindu Undivided Family; A Company; A Firm; An Association of Persons or a Body of Individuals whether incorporated or not; Every artificial juridical person, not falling within any of the preceding subclauses, and Any agency, office, or branch owned or controlled by such person.
Types of Instruments
Indian Companies can issue:
Equity shares; Fully, compulsorily & mandatorily convertible Debentures; Fully, compulsorily & mandatorily convertible Preference shares; ADRs / GDRs; FCCBs.
Preference Shares/Debentures i.e. Non-convertible, optionally convertible or partially convertible for issue of which funds have been received on or after May 1, 2007 are treated as Debt. OCBs are derecognised as class of investors w.e.f. September 16, 2003 but can invest with prior approval of RBI through Government Route. Bonus/Rights shares can be issued without RBI approval but in accordance with Companies Act, 1956/SEBI(ICDR) Regulations, 2009, etc.
only permitted for NRIs and PIOs subject to certain limitations; only permitted for NRIs and PIOs subject to certain limitations;
Proprietary concern
Automatic Route
Government Route
General Rule Inform RBI within 30 days from the date of Receipt of Funds / Issue of shares Pricing: FEMA Regulations Unlisted Discounted free Cash Flow Valuation Listed SEBI Guidelines
By Exception Approval of Foreign Investment Promotion Board is required (Decision generally within 4-6 weeks)
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Besides foreign investment in any form, foreign technology collaboration in any form including licensing for franchise, trademark, brand name, management contract is also completely prohibited for the Lottery Business and Gambling and Betting activities.
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Where the existing joint venture, investment by either of the parties is less than 3 per cent; or
Where the existing joint venture / collaboration is defunct or sick; or For issue of shares of an Indian company engaged in Information Technology sector or in the mining sector, if the existing joint venture or technology transfer/trade mark agreement of the person to whom the shares are to be issued are also in the Information Technology sector or in the mining sector for same area/mineral.
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(i) a pension fund, mutual fund, investment trust, insurance company, reinsurance company; (ii) an International or Multilateral Organisation or an agency thereof; (iii)a Foreign Governmental Agency, Sovereign Wealth Fund or a Foreign Central Bank; (iv)an asset management company, investment manager or advisor, bank or institutional portfolio manager, established or incorporated outside India and proposing to make investments in India on behalf of broad based funds and its proprietary funds, if any; (v) a trustee of a trust established outside India and proposing to make investments in India on behalf of broad based funds (atleast 20 investors/holds >49% of shares or units in the fund) and its proprietary funds, if any; (vi)university fund, endowments, foundations or charitable trusts or charitable societies.
LawQuest 2010. All Rights are Reserved.
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FII/sub-accounts may invest in the Capital of the Indian Company either under the FDI Scheme/Policy or the Portfolio Investment Scheme with a 10% individual limit and 24% aggregate limit.
Allowed to trade in all exchange traded derivative contracts approved by RBI/SEBI
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Investments by NRIs
Invest in shares of listed companies under PIS on repatriation and non-repatriation upto 5% of paid-up capital and aggregate of all NRIs cannot exceed 10% but can be increased to 24% with special permission in the company. Short selling is not permitted and has to take delivery of shares. Payments from NRE/FCNR(B) account if purchase of shares and/or debentures on repatriation basis. Payments from NRO account if purchase of shares and/or debentures on non-repatriation basis. Allowed to invest in Exchange Traded Derivative Contracts.
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Life time validity Permits one to live and work in India No travel restrictions No FRRO registration required
* Individuals who have ever been citizens of Pakistan or Bangladesh are not eligible for OCI.
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LawQuests Areas of Practice Global Business Migration Employment Law Foreign Direct Investment Foreign Indirect Investment Company and Commercial Transactions Real Estate Private Clients Intellectual Property
LawQuest 2010. All Rights are Reserved.
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Thank You
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