These FAQs attempt to set up the common concerns that users have about them in a simple to understand vocabulary. However, for conducting a deal, the FOREX Management Act, 1999 (FEMA), and the Regulations made or directions released thereunder may be described. Q.1: How does an Indian company get international investment?
1. Automatic Route: Foreign Investment is allowed under the automatic route without prior approval of the Government or the Reserve Bank or investment company of India, in all activities/ industries as specified in the Regulation 16 of FEMA 20. 2. Government Route: Foreign investment in activities not protected under the automated route requires prior approval of the Government.
Q.2: What are the Capital instruments permitted for getting foreign investment within an Indian company? Answer: ‘Capital Instruments’ means equity shares, debentures, choice shares, and talk about warrants released by the Indian company. Share warrants: Share warrants issued on or after July 8, 2014 will be considered as capital instruments. Debentures: ‘Debentures’ means completely, compulsorily and mandatorily convertible debentures. Preference shares: ‘Preference’ shares means fully, and mandatorily convertible preference shares compulsorily.
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Non-convertible/ optionally convertible/ partially convertible preference shares issued as on or more to April 30, 2007 and optionally convertible/ partially convertible debentures released up to June 7, 2007 till their original maturity are reckoned to be FDI compliant capital tools. Q.3: Whether extension of compulsorily convertible preference shares (CCPS) or compulsorily convertible debentures (CCDs) requires RBI acceptance?
Answer: Tenor of convertible musical instruments will be led by the instructions framed under the Companies Act, 2013, and the guidelines framed thereunder. However, the investee company should ensure that the price/ conversion formula of convertible capital devices is determined upfront during problem of the instruments. The purchase price at the time of conversion should not in any case be less than the reasonable value worked out, at the right time of issuance of such tools, in accordance with the extant FEMA regulations. Q.4: What is a convertible be aware?
Q.5: Who can choose convertible notice and what are the instructions in this respect? Q.6: What’s intended by Foreign Investment, Foreign Direct Investment, and Foreign Portfolio Investment? Answer: Foreign Investment means any investment made by a person resident outside India on a repatriable basis in capital devices of the Indian company or even to the capital of the LLP.
Q.7: What’s designed by capital on a fully diluted basis? Answer: a fully diluted basis means the total number of shares that would be exceptional if all possible sources of conversion are exercised. Q.8: If the foreign investment will be categorized as FDI or FPI predicated on the timetable under which the investment has been made. Answer: No, FDI and FPI are agnostic from the point of view of the timetable under which the investment has been made. It’s the percentage that defines whether it is direct or portfolio investment.