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Sale of shares in Indian
company by Non-Resident to another Non-Resident. Any FEMA implications?
- Since the transaction is between non-residents,
FEMA will not be triggered here and also it's a private transfer of shares with
a shareholder who has no direct connection with an Indian company.
However, in case of sale of shares on a stock exchange by a non-resident under a portfolio investment scheme banks require form FC-TRS which means the reporting under FEMA should be there. There is an issue here in case of sale of listed shares by a non-resident to another non- resident.
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What is One Person Companies
(OPCs) in India.
-OPC is a unique form of business entity
introduced with the Companies Act 2013.
-OPC allows a single individual to incorporate a
company, providing them with a separate legal identity while enjoying limited
liability. Moreover, the compliance requirements for OPCs are more
relaxed compared to other legal entities.
-So, OPCs are particularly suitable for small
businesses due to their simplified compliance requirements and limited
liability protection.
-The single individual acts as the sole member and
can also serve as the director of the OPC.
-However, it is necessary to appoint a person as a
nominee after obtaining written consent.
-It is important to note that an OPC cannot carry
out Non-Banking Financial activities, including investment in securities of any
body corporate.
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Indian company investing
into a Dubai entity and that Dubai entity invests again in another Indian
company. Is it allowed under exchange regulations - Yes!
An Indian company investing into a Dubai entity.
After this, the Dubai entity invests into the Mauritius entity and that
Mauritius entity invests in another Indian company. Is it allowed - Yes!
Now, not more than two layers are allowed so, any
structure after the above Mauritius entity before investing again in India is
not allowed per se.
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