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Set up of an Indian company

Set up of an Indian company by the foreign entity (FDI)

In order to strategically invest in India, NRIs can invest in Indian Company through Foreign Direct Investment (FDI). A foreign company planning to set up business operations in India may incorporate a company under the Companies Act, 2013, as a Joint Venture or a Wholly Owned Subsidiary. A person resident outside India or an entity incorporated outside India (except for citizen of Pakistan and Bangladesh and entities in Pakistan and Bangladesh), can invest in India, subject to the FDI Policy of the Government of India.

Depending on the sector of the company, percentage limits upto which investment can be made in a particular sector have been stated in the FDI Policy. Further, FDI policy also states whether any approvals from RBI/FIPB/Other governmental authorities is required to be obtained or not. FDI is prohibited in the following sectors:

Note: Foreign technology collaboration in any form including licensing for franchise, trademark, brand name, management contract is also prohibited for Lottery Business and Gambling and Betting activities.

Types of Instrument: Indian companies can issue equity shares, fully and mandatorily convertible debentures, fully and mandatorily convertible preference shares and warrants subject to the pricing guidelines / valuation norms and reporting requirements amongst other requirements as prescribed under FEMA Regulations.

Remittance of sale proceeds: Bank can allow the remittance of sale proceeds of a security (net of applicable taxes) to the seller of shares resident outside India, provided the security has been held on repatriation basis, the sale of security has been made in accordance with the prescribed guidelines and NOC / tax clearance certificate from the Income Tax Department has been produced. - by A M B JAIN & CO.

Transfer of Shares by way of Sale:

From	To	Permission required / not
Non-Resident(other than NRI or OCB)	Non-Resident	No RBI Permission is required
NRI	NRI	No RBI Permission is required
Non-Resident	Recognized stock exchange through registered broker	No RBI Permission is required
Non-Resident	Resident	No RBI Permission is required
Resident	Non-Resident(other than OCB)	RBI and Government Permission is required in some cases

Transfer of Shares by way of Gift

From	To	Permission required / not
Non-Resident(other than NRI or OCB)	Non-Resident	No RBI Permission is required
NRI	NRI	No RBI Permission is required
Non-Resident	Resident	No RBI Permission is required
Resident	Non-Resident(other than OCB)	RBI Permission is required -- by A M B JAIN & CO.

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